APEC spirit: Unbreakable

Let me tell you who won in the poll on battle of “APEC hotties”, hands down—the Philippines. Where the rest of the CEOs in all of the APEC economies expressed lesser confidence on business prospects in the short term, only the Philippines stood out. CEOs, Filipino or expat, who are responsible for Philippine operations expressed confidence they will grow their business in 2016—but why?

To the tired multitudes who became street dwellers, almost sleepless for a night, to the luckier car owners who stopped at a red light only to realize it was a five-hour stop—their problem was the answer. The Philippines expects payback from the financial, physical, and emotional investment on the biggest commercial phenomenon that visited the country, the APEC Summit.

While anxiety and weariness of those who commute, especially at the onset of the APEC events, were hard to put into words, the extra security to hold off all vehicles from passing within the general vicinity where APEC economic leaders were meeting, until their meeting was done and they had left the area, was totally understandable. It was not orderliness that was sought to be achieved. It was security from the unpredictable terrorist threat. Because nothing of such nature happened, which could have easily reversed the gains we were trying to achieve by hosting the APEC event, we can all breathe a big sigh of relief.

The gloomy terrorist attack in Paris just before the APEC event probably highlights why government and business leaders alike put geopolitical risks quite high in the hierarchy of risks that impact their agenda or investment decision making. In our region, the spat between South and North Korea may be less concerning. But the South China Sea reclamations can cause real friction. Indeed, even China’s president has admitted, any progress is only possible in an environment of peace.

In the APEC CEO survey conducted by PwC (the knowledge partner of the APEC CEO Summit) on 800 CEOs from the 21 member economies, the tentative confidence about growth prospects principally comes from financial volatility. When the US Federal Reserve decided to raise interest rates, it did so because the US economy seemed to be doing well. And it did not seem to need the help by way of lower interest rates that were granted as stimulus at the onset of the so-called American depression in 2007. CEOs worry whether the growth of the US economy will happen as expected. When China devalued the yuan to create a “sale” scenario for its export products and boost the slowing domestic demand, CEOs worried whether the slowdown in China’s economy would not be sharper than expected.

Natural disaster risks also top the CEOs’ list of worries. Real damage to manufacturing facilities and trading hubs do happen, but also, their market, the public, can be direly impacted and their ability to purchase can be severely handicapped. That is why the preoccupation now of all discussions in disaster risk management is how to build resilient structures and how to normalize operations and help normalize peoples’ lives soon after a tragic natural event.

Not surprising that in addition to attacks by nature, CEOs lose sleep on cyber-attacks. This worry is well-placed. Remember when Sony Pictures was recently hacked and coerced by North Korean hackers not to show the satire picture about their leader? Even eBay reportedly suffered a cyber-attack that compromised information of millions of their patrons. We need not sample the many private corporations who were victimized. Wikileaks had the ability to penetrate highly secured Pentagon documents and leaked US war diaries, among others. And the now very popular “Hacktivist” Anonymous that can make any kind of organization they train their eyes on unsafe. Successful cyber-attacks can not only maim a corporation’s virtual infrastructure, it can also access its most treasured intellectual properties.

So you’d wonder, with all of the above that dampened CEOs’ confidence, where is their net confidence about the medium and long-term coming from? They placed their bets on regional connectivity. They put more value on regional trade agreements such as the Asean Economic Community, or even the TransPacific Partnership being worked out, versus global plenary agreements such as the WTO. In the more intimate community of APEC economies, discussions on inclusive growth were pushed by ministers, and our own Trade secretary was even able to push an agenda on helping micro business enterprises in addition to small- and medium-scale enterprises.

You may say the Philippines produces the loudest noise in so far as inclusive growth is concerned. But other APEC economies share this legitimate concern. Even the US is not spared, what with its growing number of tent dwellers in some states, and the fact the tents are all lined up and orderly does not escape the fact of abject poverty in their midst. Helping inclusive growth is a social act, but it is also very much connected to business prosperity. Less poor people and a bigger middle class mean an expanded market.

One of the complexities that need to be managed in inclusive growth is the 2020 visions of technological advancement where the CEOs’ confidence is also coming from. CEOs see the future for robotics (that can substitute human laborers in factories) and 3D printing now in infancy stage (will an order for a prosthetic leg while you wait be indeed possible?). Will this displace a segment of the workforce or can they be successfully retooled for inclusion?

A lot of other insights are worthy of sharing, but I am running out of space. So for the moment, allow me to express much thanks to the brilliant Filipino leaders and individuals who made APEC happen, in the manner that it did right here. Our country owes you. Let us all strike while the iron is hot, while the Philippines is the apple of everyone’s eye. The Filipino enemy of ningas cogon lurks, but can be beat by collective optimism and putting our best foot forward as a people, APEC event or not.

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Alexander B. Cabrera is the chairman and senior partner of Isla Lipana & Co./PwC Philippines. He also chairs the tax committee of the Management Association of the Philippines (MAP). Email your comments and questions to aseasyasABC@ph.pwc.com. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.