Economy
From The Report: The Philippines 2012
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Economic growth in the Philippines slowed from 7.6% in 2010 to 3.7% in 2011, and public-private partnerships (PPPs) that would have boosted public spending were delayed. The Aquino administration says that the wait is due to strict anti-corruption measures, and promises that 2012 will see these projects move forward. In the meantime, in late 2011 Aquino unveiled a spending package worth $1.6bn to bolster sagging demand. Local manufacturing plays a smaller role in the Philippines than it does in several of its ASEAN rivals, while the service sector, and in particular business-process outsourcing, has a bigger role. The economy also has a unique dependence on remittances from Filipinos who work overseas.
This chapter features interviews with Cesar Purisima, Secretary, Department of Finance; Ramon R del Rosario Jr, Chairman, Makati Business Club; Jaime Augusto Zobel de Ayala, Chairman and CEO, Ayala Corporation; Karel De Gucht, EU Trade Commissioner; Helen Dee, Chairperson, Rizal Commercial Banking Corporation; and Washington SyCip, Founder, SyCip, Gorres, Velayo & Co.

Articles from this Chapter

Overview

Positive sentiment: Strong fiscal situation despite slowing demand for exports
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Although economic headwinds have thrown international markets off course, the Philippine economy has managed to stay on a relatively even keel. Local authorities note that while real GDP growth slowed in 2011 relative to 2010 due to weak external demand and government underspending, household consumption has continued to see strong growth due to a burgeoning middle class and robust overseas remittance flows. In addition, consumer and business sentiment remains upbeat thanks to manageable inflation…

Analysis

Responsible business: Institutionalising corporate social responsibility in law
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Integral for companies doing business in the Philippines, corporate social responsibility (CSR) and engaging with local governments and communities are key for large investors operating in the country. Owing to the geographical make-up of the Philippines, legal and regulatory systems are largely decentralised, with local groups wielding substantial power that can determine whether or not planned projects proceed. Philippine companies, particularly large ones, are involved in projects related…

Analysis

Headed home: Remittances help keep the economy on an even keel
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The Philippines’ wealth of remittances from overseas Filipino workers (OFWs) allows for a steady inflow of cash ($20bn in 2011) and keeps local unemployment down. This is facilitated by a number of factors, including the deliberate choice of English as the medium of education and the government’s promotion and regulation of migration flows. However, there are concerns that the existence of such a “safety valve” merely covers up the underdevelopment of the Philippine economy and blunts…

Interview

OBG talks to Ramon del Rosario Jr, Chairman, Makati Business Club, and President and CEO, PHINMA Group
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Interview:Ramon del Rosario Jr How has the business community reacted to the reforms enacted by the Aquino administration? RAMON DEL ROSARIO: The mood of the private sector has been very positive over the past 18 months, and that has everything to do with the tone set by the new administration. The private sector in the Philippines, and hopefully increasingly across the rest of the world, has responded positively to the president’s determination to minimise corruption in the country. Graft…

Analysis

Partnerships for growth: Investment opportunities abound as infrastructure development continues to expand
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A 2010 World Bank report noted that “middle-income countries in East Asia will, on average, need to spend over 5% of GDP on infrastructure to meet their needs.” This fact has not gone unheeded by the government and the need to up spending on key infrastructure projects has been brought to the top of the priority list by economic planners. President Benigno Aquino III himself has led the charge in this regard and has pushed for greater private sector involvement in the country’s infrastructure…

Viewpoint

Jaime Augusto Zobel de Ayala, Chairman and CEO, Ayala Corporation, on competitiveness
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Country competitiveness has become a central theme for both developed and developing nations. We are in the midst of an increasingly open and integrated world economy where countries compete for the investment and human capital that are critical to economic growth. This focus on national competitiveness has been increasingly reinforced by global competitiveness rankings published by a variety of institutions. While the Philippines has not placed favourably in many of these surveys, it is…

Analysis

Under control: The central bank is using monetary policy to great effect
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With mounting evidence that global economic activity is tipping towards a further slowdown, the Bangko Sentral ng Pilipinas (BSP) is actively deploying monetary policy to spur domestic demand while at the same time maintaining price stability. NEW POLICIES: Policy decisions by the central bank’s Monetary Board, which cut interest rates in two consecutive meetings during the first quarter of 2012, come against the backdrop of lower domestic economic growth that officials have attributed to…

Analysis

A future fillip: Foreign investment is big business, and looks to still be growing
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Despite the effects of some negative developments in the economies of the US and the eurozone, business in the Philippines has continued to remain relatively brisk. Foreign investors have taken heart from President Benigno Aquino III’s promotion of transparency as well as the administration’s efforts to root out corruption and create a level playing field for all stakeholders. Moreover, an upgraded credit rating has given a boost to investor confidence. DRAWING FDI: Indeed, the Joint Foreign…

Interview

OBG talks to Helen Dee, Chairperson, Rizal Commercial Banking Corporation
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Interview:Helen Dee Which sectors have the highest investment and growth potential in the medium term? HELEN DEE: The mining, energy and environmental sectors continue to attract investors, both internationally and domestically, and the power industry offers rich opportunities for collaboration and investment. The Philippines needs to attract both foreign and local investors to pursue projects like waste-to-energy facilities, which provide a more viable alternative to sanitary landfills. Still,…

Interview

OBG talks to Washington SyCip, Founder, SyCip, Gorres, Velayo & Co.
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Interview:Washington SyCip To what extent has the new administration changed the attitude of business leaders in the Philippines? WASHINGTON SYCIP: It seems the country now has an honest president, which is long overdue and marks a key difference compared to the past. The Aquino administration has put together a good team, and the focus on transparency and eliminating corruption from the top has proceeded down throughout the administration and into the private sector as well. This has contributed…

Analysis

Credit where it’s due: Ratings agencies confirm a strong long-term outlook
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In its annual report released in March 2012, Standard & Poor’s (S&P) noted that although it is a mixed picture for Asia-Pacific sovereigns for the next 12-18 months, countries in the region face global and domestic rises from a relatively strong position. For the Philippines this is especially true as the government has shown progress in areas such as reforming the economy, improving governance and fiscal consolidation. These measures have not gone unnoticed. Indeed, the Philippines’…