‘PHL still attractive haven for investors’
THE Philippines is still the best place to be for long-term foreign and local investors.
This was the assessment shared by University of Asia and the Pacific economics professor Bernardo Villegas at the recent Asia CEO Forum, citing various foreign studies and reports that show, “the Philippines as one of the most promising emerging markets in the world in the next 20-30 years.”
The Philippines, he noted, is at the “epicenter of the most dynamic economic region in the world— Asia Pacific—which fortunately is not suffering from the economic
diseases of protectionism, such as ‘America First’ and Brexit.” Several independent studies and reports from HSBC, Oxford Economics, and The Economist, indicated the region’s strong economic prospects, with Vip—vietnam, Indonesia, and the Philippines—among the major winners, he said. The studies, he admitted, were made before the Covid-19 outbreak but continued to be relevant.
For one, he said, the country’s young, growing and English-speaking population “gives us a tremendous leeway to send million of our workers to service aging populations,” such as South Korea, Taiwan, Japan and China. This will help bring in more overseas remittances to the country.
The youth are also strong consumers, and considering much of the country’s growth is consumptiondriven, the lifting of restrictions on movement will help boost the economy, as they go back to malls or spend on domestic holidays.
Villegas, dubbed “the prophet of boom” for his often optimistic outlook on the economy, underscored, however, the need for a shift in the Filipinos’ mindset about blue-collar work. “The irony of our manpower situation is that despite our having many young people, we have a shortage of technical skills. We have a shortage of carpenters, plumbers, electricians, mechanics...the reason is sociocultural. Parents and young people here are still so obsessed with a college diploma,” he said. This, he said, is among the long-term challenges in the Philippines’s bid to attract foreign direct investments.
Other challenges include the low agricultural productivity, bureaucratic red tape, high power rates, corruption and poor governance and the high frequency of natural calamities.
But he also projected post-covid “sunrise” industries: food and agribusiness (including post-harvest, cold storage, processing and logistics); digital technology, BPOS; health and wellness (pharmaceuticals, clinics and hospitals, gyms); and skills development as well as formal and non-formal education.
“The ones that are going to be unfortunate—it will take at least two years to see any recovery—are travel and tourism, except for domestic tourism [and] anything to do with restaurants, dining out, etc., I think as long as the virus is there,” said Villegas. Other industries that will likely have an “L” shaped recovery are fashion, as well as luxury goods and cars.
Another reason he thinks the Philippines is a good place for FDI in the next 20-30 years is the economy’s “transition from a low, middle-income [$4,000 to $10,000 per capita] to upper, middle-income level,” thus expanding the discretionary funds of the consumers and allowing them to buy goods and services other than their basic needs.
Another is the country’s abundant natural resources especially for tourism, government’s “Build, Build, Build” program that expands infrastructure to the regions, and the faster growth in the regions.
“Manila is no longer the center of industrialization and growth in our country. You have areas south of Manila like Batangas with a good port, Clark and Subic [in the north] with airports, [and] in the Visayas you have Iloilo, which is a smart city in terms of infrastructure. In fact, all big real-estate developers are busy putting up projects there,” said Villegas. “In Mindanao, you have Davao and Cagayan de Oro. That is definitely a great advantage that investors will no longer have to come to Manila; they can spread out because of the Philippines, and find a better environment for investment.”
Meanwhile, he welcomed the presence of Chinese workers in the Philippines, especially in the online gaming industry, “because they do not really take jobs from Filipinos, because we have to be excellent in Mandarin to be able to service the clients in China. They do add to the economy by renting a lot of these offices. In fact, there will be a crisis in real estate if they all disappear. As long as we’re able to address the criminal elements among them.”