Manila Bulletin

Trump’s win – a boom or bust to the econ­omy?

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When Trump won the elec­tions, I was in the United States last Novem­ber 2016. We went to a restau­rant for din­ner af­ter the elec­tion re­sults came out and we were dis­cussing how in the world Trump won? There were Filipinos though, who voted for Trump and I knew later there were many of them who voted for him in­clud­ing some Filipinos whom I met on the plane back home.

I was just a tourist, but I was try­ing to lis­ten to the rea­sons why some Filipinos there voted for him. I asked one lady who was seated be­side me “don’t you know Trump is for pro­tec­tion­ism and his poli­cies might have a neg­a­tive ef­fect on the many Filipinos who are liv­ing in the States? Fur­ther­more, he is bent on bring­ing jobs back home and that means many out­sourc­ing busi­nesses (where ma­jor­ity of the com­pa­nies are from the United States) might be re­lo­cated back to the US.”

Her an­swer is the same an­swer I heard from most Filipinos in the US why they voted for Trump. It is more of their re­li­gious and per­sonal con­vic­tions – they are against same sex mar­riages, a neg­a­tive re­ac­tion to pro-abor­tion poli­cies of Obama and they strongly feel that the val­ues of Amer­ica are go­ing down the drain. The pro-Pales­tinian stance of the Obama ad­min­is­tra­tion is the fi­nal straw that led them to the de­ci­sion to vote for Trump.

The ef­fect of the Trump vic­tory on the econ­omy of the Philip­pines is the least of their con­cerns. Even the acid tongue he has and the type of per­son­al­ity he pos­sessed which earned him the ire of many, will not dis­suade them from vot­ing for Trump.

Go­ing fast for­ward this Jan­uary 2017 when Trump took the po­si­tion as the leader of his coun­try, I was sur­prised of some sur­vey that shows that among the ASEAN na­tions the prospect for the Philip­pines is go­ing up­ward rather than down with a Trump ad­min­is­tra­tion in the US. While the economies of our ASEAN neigh­bors are fore­casted to go down – Sin­ga­pore, Thai­land, In­done­sia and Malaysia – the Philip­pines seem to stand to gain from Trump’s vic­tory or is it?

The fore­cast for the Philip­pines were re­vised to be up to 6.6%-6.9% through 2018 more be­cause of pub­lic and durable equip­ment in­vest­ments that “can help boost con­struc­tion.” My per­sonal thoughts on this is – that al­though there is an air of un­cer­tainty in the out­sourc­ing in­dus­try with the pos­si­bil­ity of a pull-out of some com­pa­nies for the work to be brought back to the United States, this neg­a­tive im­pact may have been par­tially neu­tral­ized by a ro­bust and grow­ing econ­omy in our coun­try.

The re­sult of joint sur­vey of the Ja­pan Cen­ter for Eco­nomic Re­search and the busi­ness pub­li­ca­tion Nikkei Asian Re­view showed that ex­cept for the Philip­pines the rest of the ASEAN na­tions will have a re­vised down­ward fore­cast on their economies.

In a re­port re­leased last De­cem­ber 30, 2016 in Nikkei Asian Re­view, it shows a de­cline in the av­er­age growth fore­cast for Sin­ga­pore in 2016 down to 1.4% from 1.8% in the pre­vi­ous sur­vey in Septem­ber. This is be­cause of Sin­ga­pore’s ul­tra-open econ­omy. The fi­nan­cial cen­ter will likely be one most ex­posed to the threat of pro­tec­tion­ism ac­cord­ing to the re­port.

Malaysia and Thai­land fore­casts were also re­vised down be­cause these coun­tries are ex­port ori­ented. In­done­sia al­though fore­casted to go down for 2016 and 2017 it is ex­pected how­ever to speed up growth at more than 5% through 2018.

In the re­port, it men­tioned about In­dia and the Philip­pines tak­ing less se­ri­ously the threat on the rise of pro­tec­tion­ism and other risks com­pared to the four coun­tries men­tioned above with a down­ward fore­cast. This de­spite the fact that most of these two coun­tries out­sourc­ing busi­ness are from the United States.

My take on this is that out­sourc­ing their work to the Philip­pines and In­dia will be more ben­e­fi­cial to the United States than to these two coun­tries. Even if their coun­try will give these busi­nesses tax ben­e­fits if they bring back their work in the US, they still stand to lose a lot in rev­enue since the la­bor ar­bi­trage they gain from out­sourc­ing may not be com­pletely off­set by these tax ben­e­fits.

But who knows what other strate­gies will the Trump ad­min­is­tra­tion may come up, to bring back these busi­nesses back home? For the mean­time the out­sourc­ing in­dus­try should beef up their clien­tele and look else­where other than the US to sell their out­sourc­ing ser­vices.

Let us hope though that in­deed the Philip­pines will stand to gain more in the Trump ad­min­is­tra­tion rather than los­ing in the long run.

(Wilma Mi­randa is the Man­ag­ing Part­ner of In­ven­tor, Mi­randa & As­so­ci­ates, CPAs and Trea­surer of KPS Out­sourc­ing, Inc. The opin­ions ex­pressed herein are the views of the writer and do not nec­es­sar­ily re­flect the views and opin­ions of these in­sti­tu­tions)

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