Foreign traders upbeat on Philippines economy

MANILA, Philippines - Foreign businessmen are bullish on the economy this year despite citing some backslide in key sectors in the first quarter.

In a poll conducted by The STAR on some foreign business leaders in the country, all of them have indicated a rosy forecast for the economy as well as positive outlook on foreign direct investment (FDI).

“We are optimistic that GDP (gross domestic product) growth will continue at about the current level, although there is no national election to stimulate campaign spending. Manufacturing will continue its higher growth rate and tourism will see large increase in visitors from China,” American Chamber of Commerce of the Philippines (AmCham) senior advisor John Forbes said.

“We expect an increase in GDP because of the administration’s continued policy commitment in increased public infrastructure spending, which we hope will have spillover effects into consumption and investment growth,” Guenter Taus, president of the European Chamber of Commerce of the Philippines (ECCP) said.

The economy expanded 6.8 percent in 2016 and the government expects it to accelerate between 6.5 percent and 7.5 percent this year. 

FDI inflows, meanwhile, reached $7.93 billion last year, $2.29 billion higher than the $5.64 billion recorded in 2015 and exceeded the  $6.7 billion target set by the Bangko Sentral ng Pilipinas.

“We still see a lot of optimism and feel that we have an excellent economic team in place. With all the hardwork by the team that is being done, we see better results in terms of GDP and FDI being achieved. As long as we honor contracts then it should do very well,” Federation of Indian Chambers of Commerce Philippines Inc. (FICCP) president Rex Daryanani said.

“There should be no reason why FDI should exceed 2016 figures. The long term development plan and growth potential in the Philippines is simply too attractive for foreign investors to ignore,” Nordic Chamber of Commerce of the Philippines (NordCham) president Bo Lundqvist said.

Canadian Chamber of Commerce of the Philippines president Julian Payne believes the country’s economic outlook continues to look good with FDI inflows increasing and current credit ratings holding.

“The longer term outlook will depend very much on the administration delivering its 10-point economic agenda, in particular the reductions in corporate and personal income tax and easing of restrictions on foreign direct investment.  The continuation of sound monetary management under the next BSP governor will also be an important factor,” Payne said. 

In terms of investor interest in expanding or investing in the Philippines, however, each group had varying prospects.

Small and medium enterprises from Europe are still interested in entering the Philippine market while multinational corporations have expressed hesitation, according to ECCP’s Taus, adding that European companies already in the country are largely still on a “wait-and-see” mode.

For American companies, AmCham’s Forbes said firms engaged in the domestic market have long expanded in line with the expansion of the Philippine economy.

Exporters of goods and services to the US, however, face considerable uncertainty about a possible border tax.

Meanwhile, majority of Nordic investors are optimistic about their growth prospects in 2017 in the Philippines and are expected to expand their operations in the country, both in terms of selling to the local market, as well as providing in-house services out of the country, according to NordCham’s Lundqvist.

FICCP’s Daryani said Indian investors, for their part, are bullish in general but are closely monitoring developments.

Among the key developments that transpired in the country in the first quarter which the groups identified as “negative” is the order for the closure of 23 mines by the Department of Environment and Natural Resources.

NordCham’s Lundqvist also cited concerns about the continuing negative news headlining international press about the law and order situation and human rights abuses in the Philippines.

ECCP’s Taus said the excise tax eyed to be imposed on automotive is an area of concern for his group as this negatively affects the European automotive brands and burdens the public with higher car prices.

For AmCham’s Forbes, NAIA and ground transportation congestion remain serious while MRT-3 continues to operate below capacity.

Meanwhile, positive developments in the first quarter of the year identified by the businessmen include progress in major infrastructure projects such as the opening of the NAIA Expressway Phase II and commencement in the construction of MRT-7, approval of the National Broadband Plan, and the release of a comprehensive Philippine Development Plan by the National Economic and Development Authority and the department order on contractualization by the Labor department.

Last week, results of the Makati Business Club’s First Semester Executive Outlook Survey for 2017 showed that local business executives in the country remain highly optimistic in their outlook on the Philippine economy despite anticipation of higher inflation and interest rates this year coupled with a critical outlook on trade.

The bullish outlook on the economy is prompting most of these local firms to continue pouring big investments into the country in the coming year.