Half of the businesses engaged in German-Philippine economic relations said they are in a “better business situation,” but underscored the need to employ more as they cited the “lack of skilled workers” among the top issues in the business landscape in the Philippines, according to a survey conducted by the German-Philippine Chamber of Commerce and Industry (GPCCI).
The Fall 2023 AHK World Business Outlook Survey, which was conducted by the GPCCI in October 2023 noted, however, that this is “slightly lower” by 12 percent compared to the 62 percent of the respondents who said six months ago that they are in a better situation.
Likewise, the survey showed that the percentage of firms, which forecast optimism in business development for the next 12 months also slightly declined to 68 percent in the fall survey from the 74 percent result in May 2023.
In contrast, the GPCCI survey listed the “biggest risks” to these firms’ economic development in the next 12 months.
Some 38 percent of the firms in the survey said they see prices of energy as the biggest risk; 37 percent cited demand and lack of skilled workers; and 32 percent said exchange rates and economic policy conditions are the biggest risks for their companies for next year.
GPCCI Director and Policy and Advocacy chairperson Marian Norbert Majer underscored, “While many of our respondents want to employ more, we see that the lack of skilled workers remains to be one of the identified top issues.”
As such, he urged the government to “look at strategies and policies that promote skills development in our country that can both benefit local and foreign employment opportunities for Filipinos.”
In relation to this, the survey noted that 54 percent of the firms said they would hire more in the next 12 months. This is slightly higher than the 50 percent figure in the survey conducted by GPCCI six months ago.
Meanwhile, when asked how they judge the local economic development in the next 12 months, 46 percent of the participating firms in the survey said they “forecast the same development on local economy” within the one-year period.
With this, 41 percent of the participating firms are planning to invest the same amount in the country in the next 12 months.
Moving forward, these firms unveiled the top three areas to make significant investments in 45 percent of the companies are planning to invest in Sales and Marketing; 39 percent are eyeing the Services sector, and 27 percent plan to earmark money for Research and Development.
As to the top factors that these firms take into account when deciding to invest locally, 56 percent said they consider Market Size or Market Development; 33 percent said they look at the local economic policy framework and 29 percent of the firms said diversification is on top of their minds when making local investment decisions.
In anticipating the impact of the EU-Philippines Free Trade Agreement (FTA) on businesses involved in German-Philippine economic relations, the survey showed that 46 percent of the respondents view the trade deal as “very important” to the company’s operations success.
However, these companies cited specific challenges they encounter when exporting goods and services from the Philippines.
Based on the survey, 39 percent of the firms identified “cumbersome” customs procedures; 37 percent cited tariffs and quotas; and 36 percent said technical barriers to trade such as conformity testing and certification are the issues that they face when exporting goods and services.
On the other hand, the firms noted the potential benefits that they foresee for their businesses as a result of the EU-Philippines FTA.
About 40 percent of the companies said with the trade deal, they will be able to “expand/maintain current investments;” 33 percent said the trade deal will help them “gain competitive market advantage” and 32 percent of the firms said this FTA would enable them to consider new investments.