Raising the Philippines' profile in the US
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PHILIPPINES BUSINESS AND INVESTMENT FORUM | March 3, 2016
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MULTI-DIMENSIONAL APPROACH TO GROWTH
PH Investment Forum Highlights Achievements of Aquino Administration and Reassures Investors of Political Stability and Growth Prospects in Key Sectors
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New York City - At the March 3 Philippines Business and Investment Forum held in the Sheraton New York Times Square, over 290 attendees listened as panelists presented an optimistic Philippine economic outlook, citing steady gains in GDP growth of 6% under the Aquino administration, positive investment grade ratings, a broad government revenue base, improved transparency index and sustained good governance standards. The Philippine delegation was led by Finance Secretary Cesar V. Purisima, former Trade Secretary Gregory Domingo, Agrarian Reform Secretary Virgilio de los Reyes, Chairman of Philippine Competition Commission Arsenio M. Balisacan, and H.E. Ambassador Jose L. Cuisia, Jr.
In a dialogue, US-Philippines Society Co-chair Ambassador John D. Negroponte and Founding Director Enrique Razon underscored the importance of trade facilitation and regional integration. They cited areas where the Philippines has comparative advantages. US-PH Society Directors Ambassador Jose E.B. Antonio, Cirilo Noel, and Jay Collins represented the private sector and banking industry.
The forum, organized by InvivaLink and co-sponsored by the Philippine government and the US-Philippines Society, provided an effective platform for direct networking, facilitating 80 one-on-one side meetings between interested US investors and high level officials and executives.
The country's robust economy offers lucrative investment opportunities for US businesses in key sectors including infrastructure, IT-business process management, agriculture, mining and tourism. The forum highlighted the Philippines' multidimensional growth initiatives in integrating SME's (small and medium enterprises) representing 90 percent of businesses, into the global supply chain.
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H.E. Ambassador Jose L. Cuisia, Jr. |
INVEST IN THE FILIPINO PEOPLE
Philippines' greatest resource locally and overseas
In his welcome remarks, Philippine Ambassador Jose L. Cuisia, Jr. narrates the Philippine success story of good governance, competitiveness, and inclusive economic growth.
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Finance Secretary Cesar Purisima |
GOOD GOVERNANCE
Finance Secretary Cesar Purisima stressed how the administration's successful record on good governance and economic growth has sustained US investor confidence.
Under the reform agenda, legislation was enacted that institutionalize the foundation of fair competition, transparency and accountability, equity and inclusiveness. Notable are the Philippine Competition Act, GOCC Governance Act of 2011 and Amendments to the Sandiganbayan Act.
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Panelists: (L-R) Nouriel Roubini, (Roubini Global Economics), Finance Secretary Cesar V. Purisima, Amb. Jose E.B. Antonio (Century Properties Group), Arsenio M. Balisacan (Philippine Competition Commission), Elena Popina, (Bloomberg, Moderator).
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CONTINUITY OF POLICY REFORMS
The PH economy is projected to grow at 6.4 percent in 2016 and
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on track to become the 16th largest economy in the world by 2050 (
HSBC Global Research Report).
The predictions reflect confidence in continuity of policies that improve the underlying economic structure and implement reforms.
The first panel pointed out that projected economic growth is sustainable in 2016, an election year. No major change in policies is expected as the PH presidential candidates pledge to build on the administration's achievements. Furthermore, the electorate is better informed on matters of good governance.
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Ambassador Jose E.B. Antonio |
KEY AREAS OF FOCUS IN 2016 AND BEYOND
Society Director Jose E.B. Antonio recommended the next administration commit to develop new urban centers, digital and infrastructure connectivity, promotion of Philippines as the region's investment hub, unlocking the full potential of tourism, and continuity of government reforms enabling businesses to prosper.
Chief Economist Nouriel Roubini urged leaders to find the right balance in promoting high value-added jobs in both labor-intensive and high-tech industries.
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Tom Nagorski (Moderator), Enrique Razon and
Ambassador John D. Negroponte |
ASIA-PACIFIC REGION BECOMES THE ECONOMIC CENTER
Society Director Enrique Razon and Co-chair Ambassador John D. Negroponte agreed that regional integration through the ASEAN Economic Community, APEC, and the Trans Pacific Partnership, presents opportunities for investment in sectors were the Philippines will enjoy comparative advantages.
Considered a key measure to facilitate regional trade, the Customs Modernization Act improves customs procedures through automation.
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(L-R) Andrew Edlefsen (US Dept of Commerce), Andrew CAbrera (PwC), Perry L. Pe (Management Association of the Philippines), Jon Hixon (Cargill), John Goyer (US Chamber of Commerce) |
COMPETITIVE EDGE
To boost foreign investment, President Aquino signed into law the Foreign Ships Co-Loading Act to allow foreign vessels to make calls at multiple ports, reducing logistical costs and delays at Philippine ports.
The Common Carriers Tax Act offers tax exemptions to foreign carriers provided that the same exemption is granted by the carrier's home country.
Global business environment is ripe for joint ventures in the PH particularly in coconut oil processing, seeweed, and animal feeds, according to Jon Hixon of Cargill. Andrew Edlefson cited SelectUSA as a good place to find and develop partnerships.
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Ambassador John F. Maisto
President, US-Philippines Society |
US-Philippines Society President Amb John F. Maisto summarized
the position of the Philippines as an ideal strategic base for American companies eyeing opportunities in Southeast Asia. Filipinos and Americans know one another, share a unique history, have a multi-dimensional relationship as longstanding allies, and literally speak the same language.
The Ambassador assures that policy continuity in areas promoting business and investment will continue through the 2016 political transition.
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Former Trade Secretary Gregory Domingo |
INVESTMENT OPPORTUNITIES
Former Trade Secretary Gregory Domingo identified four key areas for US Businesses:
- Infrastructure
- Services - IT/BPM, Retail, MRO
- Manufacturing - Electronics, Consumer Goods, Large-scale Steel Fabrication for ship building and repair, petrochemical plants, Hi-Tech Products/Parts (Aerospace, ABS, Medical Devices), Low-Tech, high value added items found in the garments & leather goods
- Tourism
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Jay Collins, Citi Group |
FINANCIAL INCLUSIVENESS
US-PH Society Director Jay Collins lauded FinTech, a disruptive technology innovation offering
financial services using smart phones, to reach out to unbanked Filipinos. He proposed that in its supervisory role, BSP should allow e-money transactions in a experimental but prudent environment.
Microfinance also offers another means to create a more inclusive banking system and alleviate poverty.
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BANKING SECTOR
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The BSP has implemented a menu of critical banking reforms that make the Philippines' financial sector more competitive, resilient, and compliant with international standards.These reforms include the liberalization of the sector to full entry of foreign banks, allowing infusion of foreign equity to rural banks, the streamlining of procedures for establishing new banks, and the rationalization of incentives for continuing industry consolidation. These developments underscore the financial sector's preparedness for enhanced regional and international financial integration..
Financial Market as Catalyst for Growth
(L-R): Jose Luis de Haro (Moderator), John Chambers (Standard & Poor's), Ed Francisco (BDO Capital), and Marc Mealy (US-ASEAN Business Council)
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Nestor Espenilla, Jr.,
Deputy Governor
Bangco Sentral Ng Pilipinas (BSP)
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Banking Panel (L-R): Michael Nierva (Moderator), Nestor Espenilla, Jr., Lorenzo Tan (RCBC),
Jay Collins (JP Morgan).
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ENGINE OF GROWTH: INFRASTRUCTURE
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Public infrastructure spending is expected to increase to US$18 billion, or 5 percent of GDP in 2016. The Aquino administration is also working to award more projects under its US$25 billion Public-Private-Partnership (PPP) infrastructure program.
The panel urged the private sector to step up to the challenge of heightened demand for new infrastructure from households and businesses. Panelists also noted the need to reform PPP laws and procurement practices that promote a rules-based system, transparency, predictability, consistency and clarity, aimed at minimizing risks for investors. Opportunities were identified to develop water and energy supply and transportation facilities on land, sea, and air. Mining offers opportunities as the Philippines is the 5th largest mineralized country in the world.
(L-R) Anton D. Agoncillo (Moderator), Jeffrey Hardee (Caterpillar), Craig Steffensen (ADB), Cirilo P. Noel (Makati Business Club & US-PH Society), and Vaughn F. Montes (DBP).
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Re-igniting Private Sector Interest
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AGRICULTURE
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The Philippine government stands ready to serve as enabler by delineating property rights, strengthening farmers' organizations, assisting in providing access to financing and strategic public goods and supporting infrastructure linking farmers to markets. With Mindanao's fertile soil and climate conducive to agriculture, the South retains untapped opportunities in agribusiness and agro-industrialization.
Land Bank of the Philippines operates an extensive rural branch network in 81 provinces with more than 361 branches, 1,505 ATMs, and 38 lending centers to serve countryside development where small farmers comprise a third of the country's workforce and yet contribute just 15 per cent of GDP.
Dialogue on Agribusiness. (L-R) Keith W. Rabin (Moderator), John Huenemann (PMI), and Philippine Secretary Virgilio de los Reyes
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Agrarian Reform Secretary Virgilio de los Reyes
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MANUFACTURING
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The Philippines is able to capitalize on global demand for the region's exports through a diversified manufacturing base, integration into regional supply chains, competitive unit labor costs and relative political stability. (World bank Group Flagship Report, Jan 2016)
The Philippines is a manufacturing destination, owing to favorable cost, quality, scalability, and the unique traits of Filipino workers. "Malasakit" or compassion and stewardship of the Filipino workforce draw praise from employers and colleagues worldwide according to Trade Undersecretary Nora K. Terrado.
Arthur Tan, President and CEO of Integrated Micro-Electronics, Inc. pointed out that Philippine facilities have low average defects per million opportunities (DPMO) in the manufacture of semiconductors compared to the typical industry average. The
Philippine labor force has one of the lowest attrition rates in the world.
Compared to neighboring ASEAN economies, Philippine manufacturing wages increased in smaller increments, averaging 11.25% over the past five years. With a labor force comprised of highly educated, English-speaking Filipinos, adaptable to new and sophisticated technology, demonstrated strong work ethic, and welcoming to foreigners, the country's human capital is poised to provide the edge in an increasingly open market global economy.
There are opportunities for US businesses in special economic zones, administered by the Philippine Economic Zone Authority (www.PEZA.gov.ph). The zones can be an ideal site for companies looking to take advantage of tax and non-tax incentives. Investment promotion agencies (IPA's) represented by Roberto Garcia of the Subic Bay Metropolitan Authority (SBMA) and Deogracias Custodio of the Freeport Area of Bataan (FAB) emphasized the value of scalability of businesses to meet rising demands in connecting with domestic and global value chains.
Manufacturing Panel discuss strengths of the workforce.(L-R) Monette Rivera (Moderator), Nora K. Terrado (Department of Trade & Industry), Deogracias Custodio (Freeport Area of Bataan), Arthur Tan (Integrated MicroElectronics, Inc.), and Roberto Garcia (Subic Bay Metropolitan Authority).
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DTI Undersecretary Nora K. Terrado
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IT'S MORE FUN IN THE PHILIPPINES
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The Philippine tourism industry grew at an annual rate of 8.77 percent over the last five years, directly and indirectly employing over 5 million Filipinos, promoting related facilities, transport, food, beverages, accommodation, activities, attractions, and experiences. Tourism plays an important role in income creation and job generation throughout the islands, ensuring broad base inclusive growth.
The panel noted expansion opportunities in underdeveloped seaports as gateways to island destinations, luxury cruising, and specializations in meetings, conventions and exhibitions. After all, "It is more fun in the Philippines," declared by Alex Feldman, President of the US-ASEAN Business Council as he echoes the sentiment of member US companies that do business in the Philippines.
Panel on Tourism (L-R) Terry Dale (Moderator), Tourism Undersecretary Benito C. Bengzon, Jr., Rosanna Tuason Pores (Tourism Congress of the PH), Eliseo B. Santiago (Clark Development Corporation) and Jeffrey Hentz (Finn Partners).
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Tourist destinations: Boracay Island (above) and Puerto Princesa (below),.
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STAY CONNECTED
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