Majority of the German firms doing business here in the Philippines turned optimistic on their outlook in the next 12 months on the back of positive medium-term economic projection and growing confidence in local investments.
In its recent World Business Outlook Survey, the German-Philippine Chamber of Commerce and Industry (GPCCI) reported that 57 percent of the surveyed participants expressed a positive outlook, which is higher than the 29 percent in the previous study. Less respondents also said they are expecting worse at 3 percent.
“The lesser numbers in the daily active cases of Covid-19 and the graduation of major areas to a more liberal alert level presents a promising outlook for our survey respondents,” GPCCI Executive Director Christopher Zimmer said.
About 34 percent of the companies said they are expecting better economic development in the medium term, which is an improvement from just 15 percent earlier. Some 34 percent anticipate the status quo, but 12 percent—lower than 40 percent than before—are projecting a worse economic situation.
A quarter of the respondents, which is more than just 14 percent earlier, are likely to put up investments in the next 12 months. The majority or 43 percent said their local investments would remain the same. Some 31 percent, meanwhile, are expecting to have lower to no investments.
Overall, 32 percent considered the current situation of their companies as “good,” which is higher than 21 percent in the previous study. Nearly half said they were satisfied, while the remaining 20 percent said it was “bad.”
In terms of employment, 34 percent said they will hire more in the next 12 months, 51 percent will retain the current work force and 15 percent will reduce their number of employees.
The top risks identified by the respondents in the next 12 months, meanwhile, include demand, economic policy framework and price of raw materials.
Apart from supply chain constraints and postponed or canceled investments, the report also cited travel restrictions as an adverse impact of the pandemic.
“We also welcome the recently adjusted travel-related quarantine measures for fully-vaccinated individuals,” Zimmer said. “However, we still observe that key foreign nationals of both incoming and existing companies in the Philippines still experience problems coming in as entry measures and requirements remain rigorous, time-consuming, and burdensome.”
Nearly half of the companies that indicated concerns with supply chains, meanwhile, said they will add new or look for new suppliers to address the situation. However, 40 percent did not diversify their supply chains, while 19 percent said they are changing or shortening the supply routes instead.
In relation to this, among the factors the companies are looking at when searching for new production sites are legal certainty (83 percent), tax laws (67 percent), energy costs (50 percent) and electricity costs (50 percent).
When choosing for new or additional suppliers, the respondents are factoring in reliability of the suppliers (94 percent), price-performance ratio (84 percent), product quality (75 percent) and Covid-19 management (28 percent), among others.
The recent survey was conducted from September to October with a total of 74 responses from companies coming from different sectors, including, manufacturing, construction, trade and services.
Image credits: AP/Aaron Favila