Top execs express cautious optimism

The Philippines is generally being viewed with optimism by the business community largely due to the performance of the administration of President Ferdinand R. Marcos Jr. since the latter assumed office over a year ago, and how he and his economic managers have navigated well through challenging times and the President's own efforts in promoting the country as an investment haven in this part of the world.

"The Philippines is being looked at very closely by the world's C Suites," said Ernest Bower, president and CEO of the Washington, D.C.-based strategic advisory firm BowerGroup Asia which works with and represents some 150 global companies based in the US, Asia, Europe and the Middle East with offices in 27 countries around the Indo-Pacific region.

Speaking over Zoom from Washington, D.C., during the Pilipinas Conference 2023 organized by Stratbase ADRI, Bower stressed, "I think there's a lot of interest in coming to the Philippines particularly because of the global geopolitical situation currently where there's some tension between the US and China; although there was a good meeting between the two leaders (President Biden and Chinese President Xi Jin Ping) in San Francisco at the Asia-Pacific Economic Cooperation Leaders meeting chaired by the United States last week, the two countries are competing and in many ways are actually bifurcating the global economy."

Much competition

Thus, explained Bower, who also chairs the Center for Strategic and International Studies' Advisory Board for Southeast Asia, "there's much competition that's forcing a lot of companies to move their supply chains around Asia and a lot of those supply chains and investment is moving outside of China and new investment is happening outside of China in countries such as within the ASEAN. They're taking a close look at Vietnam, Indonesia, the Philippines, Malaysia and Thailand."

Admittedly, Bower, who had also been a former president and CEO of the US-ASEAN Business Council, said that while he thinks the Philippines hasn't won its fair share of foreign direct investments, "that's because frankly there were governance issues and the impression that infrastructure in the Philippines has not been at par with its neighbors, and because of the lack of clarity by government officials about where they wanted to go. But I think that has changed with the new Marcos (Jr.) administration. I think the (foreign) companies are really interested in what President Marcos is doing with the Philippines , and his economic team are a very impressive group, well known to business, well-considered by foreign investors, their inclination to undertake reforms add more clarity and I think could have very good results."

Very good economic team

Indeed, said Edgar Chua, chairman of the prestigious Makati Business Club, "We are actually optimistic of the future because the President has been able to appoint a very good economic team and we are also grateful that he has finally appointed a full-time Agriculture secretary."                   

Still, he said, whatever optimism felt by the business community is being tempered by such challenges as "high inflation and interest rates in the short term which we see as perhaps the strongest headwinds persisting for several years and will definitely hurt businesses, jobs and jobs creation."

Referring to situational reports earlier presented in the Conference by Finance Secretary Benjamin Diokno, Transportation Secretary Jaime Bautista and Trade and Industry Secretary Alfredo Pascual, Chua said, "We heard the different projects and programs the government is putting in place to sustain economic growth.

Some of those address the same key issues that we in the MBC are likewise concerned about, and these are long term issues which need to be addressed and need public-private collaboration.

Chua ticked off priority issues which include food, topmost. "Number one is food, prices are high; food actually contributes a lot to inflation and in the basket of inflation, food is about 50 percent. And of course, high prices in food results to poverty."

He reacted to earlier pronouncements by the Marcos Cabinet members who cited the young Philippine labor force as a positive factor going for the country, particularly in terms of attracting foreign investors.

"There was this talk of demographics being very good for the country but its only good if you're able to feed and educate them properly," Chua said.

Stunting

At that point, he underscored another major issue, that is, "the 30 percent stunting among Filipino children; that's going to be a major problem for the country. And related to that is education which we are very concerned about.

Children who are hungry are unable to absorb whatever it is that they're being taught in schools. If our workforce is not well educated or trained, they wouldn't be able to compete for jobs to uplift themselves, their families and the country."

Schools must level up

The education problem is not going to be resolved overnight, stressed Chua. "We've talked about of attracting high-tech jobs like AI; but how can you do that when you don't have the talent? The other problem here is we see a huge migration of our top talent: we see this among medical professionals, among teachers, and this is actually resulting in hospitals having capacity which are much less than the number of beds.

The problem is that we're exporting the best that we have and that is going to give us much more problems if we don't do anything about it."

That would be an unfortunate situation if the problems Chua mentioned are unaddressed, particularly since Bower is emphasizing that "there is much opportunity,  a lot of money looking at Asia right now; that money comes not only from the US, but from all around (other parts of) Asia, Europe, the Middle East.

There's a really good opportunity sitting in front of the Philippines right now and we are poise to bring high-level investors into the Philippines in areas like energy transition, technology, fintech, not only general technology, but AI, which is not too far a reach for the Philippines, in my view."

Great opportunities

Bower concluded his sharing with the Conference with some advice for the government. "There are great opportunities for the Philippines and I would just like to encourage the new administration to be very clear about where you want to see investment flowing into, and spend more time talking to the private sector.

The level of training and education in the Philippines is relatively high compared to the rest of Southeast Asia. Certainly, English language capabilities are extremely high and I think that ultimately we could really make those foreign direct investment numbers turn way up in 2024, in 2025 and 2026, with a concerted effort to focus on private-public partnership and investment-led growth," he said.