Logistics faults to surface in shift to e-commerce

SINGAPORE will take over the chairmanship of the Association of Southeast Asian Nations (ASEAN) next year and plans to focus on e-commerce initiatives to bolster regional trade, possibly exposing infrastructure gaps in the Philippines, off icials said.

Philippines- Singapore Business Council (PSBC) Chairman Loh Chin Hua said that with other Asian countries more advanced in terms of infrastructure and technology, the Philippine may lag as it is still developing road and rail linkages that are intended to reduce logistics costs, and as e-commerce remains underdeveloped.

“This is something that we are all going through. It’s not like it has really happened in Singapore. But it has impacted us probably a bit quicker,” said Mr. Loh.

“I think in e-commerce we need to have infrastructure set up to facilitate that. Logistics is the key part of that, and I think that will open opportunities,” he added.

Despite this, Mr. Loh said that the infrastructure challenge would be an opportunity for investors to participate.

“The opportunity for us to see other areas that [we] can possibly explore, such as infrastructure,” Mr. Loh said. Asked whether they are keen on participating in the government’s public-private partnership projects, Mr. Lao replied: “We are exploring. Given the big plans on infrastructure in the Philippines, I’m sure there would be some interesting opportunities.”

“I think we are now developing solutions to be a part of that new economy. I think logistics in e-commerce is something that’s very important. As we develop these solutions in Singapore, I see some applications in the Philippines.”

Singapore businesses also shrugged off developments in Mindanao, saying that they will continue to explore investment, especially in Davao, with the flareup of law and order issues in the region expected to be short-lived.

“I think for most businesses, we do look at business opportunities in the long term. This is obviously an area of concern, but ultimately we do look at long term fundamentals of the Philippines, and the signs are all positive,” Mr. Loh said.

During the PSBC Conference, held in Makati city yesterday, Philippine and Singapore businesses were briefed on the country’s economic performance and key sectors open for investment. They later participated in business-matching sessions.

PSBC co-chairman Guillermo D. Luchangco said a delegation of 24 Singapore businesses is looking to tap partnerships in food, infrastructure, and information technology- business process management (IT-BPM) services.

“We can seek partnership in key investments in key industries such as producing halal food, and non-food products, investments in IT- BPM services, infrastructure, shipbuilding, tourism, and support of start-ups,” he said.

“Singaporean investors can also look for expansion opportunities in new investment destinations especially in our ecozones and IT parks,” added Mr. Luchangco.

Singapore is the Philippines’ fourth- largest trading partner with total trade worth $9.288 billion, accounting for 6.6% of the Philippines’ total trade. Within ASEAN, Singapore is the top trading partner, accounting for 30.2% of the country’s trade with the region. Exports to Singapore include electronic products.

Socioeconomic Planning Secretary Ernesto M. Pernia said during the forum that the country’s growing investmentled economy will produce average growth of 7-8% starting next year until 2022.

Mr. Pernia said with the country’s expanding manufacturing sector, the country may hit middle-income status next year, on track with the government’s goal of reaching an upper-middle income country by 2022 and a high income country by 2040.

“Growth is increasingly being driven by investments vis-a-vis consumption, and led by the industry sector, specially manufacturing, relative to the service sector. In other words, sources of economic growth have broadened,” Mr. Pernia said, adding the government’s infrastructure push will support the investment growth story.

A predecessor of Mr. Pernia, Cielito F. Habito, meanwhile warned of a “silent crisis on the horizon,” as the country is lagging other countries in terms of access to financing of micro, small, and medium enterprises ( MSMEs), as well as a “demographic time bomb” of an unproductive segment of the population that may not contribute to the country’s productivity.

“MSMEs must be front and center in trade and investment. Small firms are drivers of inclusive growth, and financing continues to be the single biggest challenge,” Mr. Habito said. —