The Philippines: More than just shoes
In the 1950s, economists compared the potential of the Philippines and South Korea. The Philippines had a bright future ahead. South Korea, on the other hand, was one of the poorest countries in Asia (North Korea was more advanced). The economists thought it wasn’t going anywhere.
Fast forward a few decades, and those predictions looked silly. South Korea was turning into an economic powerhouse; the Philippines was making headlines for all the wrong reasons. When asked to think of the Philippines, many Kiwis will recall Imelda Marcos’ shoe collection. The Marcos’ luxurious lifestyle of the 1980s was at odds with high levels of poverty, unemployment and inflation experienced by much of the population.
What’s responsible for the contrasting fates of South Korea and the Philippines? You’ll hear a range of views – political instability in the Philippines, or the country’s failure to undertake land reform. Corruption continues to be a problem.
I write this column from Metro Manila, home to more than 12 million people. I’m here because the Philippines is one of the Asia New Zealand Foundation’s ‘‘priority countries’’, reflective of its growing importance to New Zealand.
The Philippines has enjoyed high growth since 2012, sustaining GDP growth rates above 5 per cent a year. It is the fastest-growing country in Southeast Asia.
But media coverage of the Philippines is often very negative. President Rodrigo Duterte has gained international attention for his controversial war on drugs. Within the Philippines, Duterte continues to enjoy high levels of popularity – and for that reason he can’t be easily dismissed. His approval rating remains close to 80 per cent.
The Philippines faces significant challenges with poverty and income inequality. Much of its growth is centred around Manila and a few other cities, with other regions lagging behind. This is particularly the case in the southern region of Mindanao, where most of New Zealand’s bananas come from.
That said, the Philippines offers a lot for New Zealand businesses mulling possible expansion into Asia. One obvious factor is the high use of the English language (which is part of the reason that the Philippines is a world leader in business process outsourcing).
Then there’s the growth potential. The Philippines is a country of 100 million people with a median age of just 24 years.
Another strength is the friendliness of the people, and the growing people-to-people links between our two countries. New Zealand now has direct flights to the Philippines several times a week, helping economic and tourism flows. We enjoy a positive relationship through joint initiatives in disaster preparedness and geothermal energy.
The Asia New Zealand Foundation has taken two groups of Kiwi entrepreneurs to the country: one representing the food and beverage sector, the other the tech sector. We have also hosted 15 or so charismatic Filipino entrepreneurs through the ASEAN Young Business Leaders Initiative, which we run for the New Zealand Government.
Wellington peanut butter company Fix & Fogg now exports its product to the Philippines after one of our programmes. Encountering Manila supermarket aisles packed with American peanut butter, co-founder Roman Jewell could imagine his own products on the shelf.
Kiwi tech entrepreneurs, meanwhile, could see opportunities in the combination of the youthful population and low internet penetration. Invsta’s Rachel Strevens, who visited Manila in June with the foundation, has already returned to follow up the potential of the cryptocurrency market in Philippines and Southeast Asia.
New Zealand businesses need to adapt to key differences though.
Most Filipinos own prepay phones and have poor internet access. Many people don’t have bank accounts. The country has a reputation for being a slow and bureaucratic place to set up a business.
In fact, the Philippines looks to New Zealand as an example when it comes to ease of doing business, governance and transparency – and has been getting support for this. Wellington-based Creative HQ is working with the Philippines Department of Trade and Industry to help.
No doubt, many New Zealanders are increasingly aware of the Philippines because our own Filipino population has grown significantly. Filipino New Zealanders are helping fill skill shortages right across the workforce.
But we’ll also be hearing more about the country as Filipino companies become increasingly active internationally.
We’ve already seen a few examples of this in New Zealand – most recently with Bounty Fresh Foods’ takeover of Tegel, and with Universal Robina Corporation snapping up another Kiwi household name, Griffin’s, in 2014.
To sum up, if Imelda Marcos’ shoes are the first thing that spring to mind for you when the Philippines is mentioned, it’s time to start swotting up on the country.