MANILA, Philippines - The Philippines showed the greatest improvement in its business environment in the Southeast Asian region in the last five years, according to a survey of the US Chamber of Commerce and the American Chambers of Commerce in the ASEAN (Association of Southeast Asian Nations).
The ASEAN Business Outlook Survey 2014, which covered a total of 475 American firms in 10 ASEAN countries from May 10 to June 10, revealed that 39 US companies in the Philippines had the biggest increase in terms of satisfaction in the local business environment from 2008 to 2013.
“The Philippines has shown remarkable improvement across almost all factors,†the survey said.
Satisfaction of American companies surveyed here increased across 14 business factors out of 16 over the five-year period, led by a 50 percent improvement in satisfaction with the stability of the government and political system.
Other business factors in which American firms showed greater satisfaction here were in availability of low-cost labor, availability of raw materials, availability of trained personnel, corruption, ease of moving products through Customs, free movement of goods within the region, housing costs, infrastructure, laws and regulations, new business incentives offered by the government, personal security, sentiment toward the US, and tax structure.
Despite the improvements in satisfaction seen over the five-year period, American firms here still have concerns about some business factors including corruption, tax structure, insufficient infrastructure, laws and regulations as well as the ease of moving goods through Customs.
Amid improved satisfaction in the Philippine business environment, 64 percent of the US firms surveyed said they expect their profits to increase this year, while 21 percent see steady income and 15 percent anticipate a decline.
For next year, 84 percent project higher profits, while eight percent expect it to remain steady. Five percent see a decrease and three percent are unsure.
In terms of business expansion, 67 percent of the respondents said they expect their workforce to increase in the Philippines this year.
Most or 92 percent of executives reported that expatriate employees are generally satisfied with their assignments in the Philippines and 82 percent assert that these expatriates will likely extend their stay.
In terms of importance of the ASEAN, 64 percent of respondents said the region has become a more important market to their companies over the past two years.
A majority or 80 percent also expect ASEAN’s importance to their companies to continue increasing over the next two years.
Across the region, corruption was named the most significant barrier to conducting business within the ASEAN by most of the 475 respondents.
“Respondents also emphasized a lack of consistency and transparency in both governmental agencies and regulations across the region, with a particular emphasis on Customs agencies,†the survey noted.
Even as American firms have concerns in the region, a majority or 73 percent of all respondents said ASEAN markets will become more important to their companies’ worldwide revenues over the next two years, citing the economic recovery and limited growth opportunities in other regions as top reasons.
The survey also revealed that regional economic integration efforts, such as agreements on trade in goods and services, are important to US companies’ investment plans in the region.
Although 52 percent of the respondents think that it is unlikely for the ASEAN Economic Community (AEC)’s goals to be met by 2015, 54 percent of companies surveyed said that they have a strategy based on the AEC.
The AEC aims to integrate the region by 2015.
As for the two major free trade agreements currently being negotiated - the Transpacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP) - more respondents expect the former to have greater impact on their companies’ future investments.
The TPP, which aims to lay the foundation for a modern, high-standards free trade area of the Asia-Pacific region, currently has 12 negotiating countries including four in the ASEAN – Brunei, Malaysia, Singapore, and Vietnam.
The RCEP, meanwhile, aims to consolidate all ASEAN plus agreements into one regional free trade network.
“ASEAN has the opportunity to position itself at the center of a very exciting evolving regional trade architecture,†US Chamber’s vice president for Asia Tami Overby said.
“This survey shows that US companies are thinking regionally, and as ASEAN continues to integrate, US companies will need to increasingly focus on strategies to realize ASEAN’s potential,†she added.