Economy
From The Report: Philippines 2014
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While other countries in the region may have been taking the spotlight as top performers, the Philippines has been recording steady and continuous growth. Indeed, the country has not had a serious annual drop in GDP since 1985. Going forward, expectations are positive. While the IMF has been reducing growth forecasts in the region, the organisation’s 2014 prediction for the Philippines is staying stable at 6%. The economy’s strong fundamentals have received the recognition of the IMF and international credit rankings agencies; however, greater investment will be key to unlocking the country’s full potential.
This chapter contains interviews with Cesar V Purisima, Secretary, Department of Finance; Roberto F Ocampo, Former Secretary of Finance, and Co-Vice Chairman, Makati Business Club; Guillermo Luz, Co-Chairman, Private Sector, National Competitiveness Council (NCC); and Miguel Varela, President, the Philippine Chamber of Commerce and Industry (PCCI).

Articles from this Chapter

Overview

Positive outlook: The economy is well-positioned to generate ongoing growth
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In the third quarter of 2013, the Philippines was one of the best-performing economies in the region, second to China (7.8%) and outpacing Indonesia (5.6%), Vietnam (5.1%), Malaysia (5.0%) and Thailand (2.5%). Its GDP was up 7% year-on-year, the fifth consecutive quarter that growth was at least 7%. The Philippines has been laying the groundwork for this over the last few decades. The country has been slowly tackling its problems and putting into place much of what is now underpinning expansion.…

Analysis

A new path: While business process outsourcing has helped to generate growth, more needs to be done to build up export industries
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Unlike many of its South-east Asian neighbours, the Philippine economy is less export dependent and more consumption oriented. More importantly, the country has two critical sources of revenue that are largely insignificant in other members of the ASEAN community: business process outsourcing (BPO) and foreign remittances. These two elements have helped keep the local economy afloat during challenging times and could help generate rapid and steady growth going forward. Indeed, while some economists…

Interview

OBG talks to Cesar Purisima, Secretary, Department of Finance
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Interview:Cesar Purisima How is the government looking to build on the Philippines’ recent investment rating upgrade and to move forward on its economic goals? CESAR PURISIMA: The market actually rates the Philippines higher than our current credit rating would suggest. Our five-year rate on credit default swaps, currently at 83, is tighter than Thailand’s, which is at around 85, placing us two notches above investment rating. Beyond the rating, our goal is to continue to transform the…

Interview

OBG talks to Cesar Purisima, Secretary, Department of Finance
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Interview:Cesar Purisima How is the government looking to build on the Philippines’ recent investment rating upgrade and to move forward on its economic goals? CESAR PURISIMA: The market actually rates the Philippines higher than our current credit rating would suggest. Our five-year rate on credit default swaps, currently at 83, is tighter than Thailand’s, which is at around 85, placing us two notches above investment rating. Beyond the rating, our goal is to continue to transform the…

Interview

OBG talks to Roberto de Ocampo, Former Secretary of Finance, and Co-Vice-Chairman, Makati Business Club
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Interview:Roberto de Ocampo What reforms need to be enacted to generate a more investment-friendly legal framework? ROBERTO DE OCAMPO: The concept of inclusive growth seems to elude the Philippines time and time again. This is not the first time we have had a growing economy, but we have not reached the stage where it translates into opportunities for the majority of the population and we observe a rising middle class. What is occurring thus far is the emergence of a new possibility to increase…

Analysis

The other hedge: Remittances from overseas workers have helped to take the edge off of economic shocks
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Remittances from overseas Filipino workers (OFWs) are vitally important to the economy and, like business process outsourcing (BPO), these revenues tend to take the edge off any economic shocks. In a further similarity to BPO revenues, remittances are also comparatively easy to accrue, requiring no capital investments, equipment or facilities, and they pose no environmental concerns. Remittances also help prop up the country’s external position, providing welcome support to the economy. But…

Analysis

Ratings boost: A necessary upgrade for investment and banks
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Citing solid growth, political stability, greater accountability and a low level of exposure to external shocks, Moody’s has joined Standard & Poor’s and Fitch in assessing the Philippines’ sovereign credit rating as investment grade, with the agency holding out the possibility of a further upgrade. On October 3, 2013 Moody’s announced it was raising the country’s sovereign rating one level from “Ba1” to “Baa3”, the lowest rung on the investment-grade ladder. The Moody’s…

Analysis

Competition and compensation: The wage debate intensifies
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Foreign firms have objected to trade union proposals to raise the minimum wage, fearing this will cost the Philippines its competitive edge in a tough global investment climate. But unions say the changes are crucial as workers shoulder increasing utility costs. Citing inflation-based rises in the cost of essentials like electricity, water, liquefied petroleum gas and school tuition, in July 2013 the Trade Union Congress of the Philippines (TUCP) reiterated a formal request that the Regional…

Interview

OBG talks to Guillermo Luz, Co-Chairman, Private Sector, National Competitiveness Council (NCC)
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Interview:Guillermo Luz What are the current priorities to simplifying business processes and increasing competitiveness? GUILLERMO LUZ: At the NCC, we track around 10 different reports globally to see where we stand as a country in a broad range of global indices. These include the World Economic Forum (WEF) ranking, which presents a macroeconomic picture, and the World Bank International Finance Corporation (IFC) ranking, which is a process-oriented assessment. The Philippines has made…

Interview

OBG talks to Miguel Varela, President, the Philippine Chamber of Commerce and Industry (PCCI)
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Interview:Miguel Varela What reforms can boost capital flows into the country and increase foreign direct investment (FDI)? MIGUEL VARELA: The country’s recent receipt of investment grade status from all three major credit rating agencies speaks greatly of the reforms initiated by the government. However, to ensure a sustainable flow of FDI, a combination of institutional policy and administrative reforms are needed to attract long-term investments and promote expansion of existing developments. By…

Analysis

Real free trade: Should it pass, the TPP agreement will have a wide-ranging impact
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Of all the free trade agreements (FTA) signed and in negotiation, the Trans-Pacific Partnership (TPP) promises to do the most to improve the fortunes of the Philippines. It will not only lift trade numbers, which is vital if the country is going to grow enough to reach its economic targets, but it will also force it to make a number of difficult reforms necessary for the country to move forward in a sustainable way. However, what makes it such a significant pact is what may also make it one of…