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Growing from strength to strength
JUST a three- to four-hour flight away from key cities in Asia, including Singapore, the Philippines' location makes it well-connected to its trading partners in the region.
Singapore is the Philippines' seventh largest trading partner and its largest export market in Asean. Two-way trade in 2018 amounted to S$14.1 billion and Philippine exports to Singapore were worth S$5.7 billion.
These figures have the potential to grow and Ambassador Yap notes that the Philippines' abundance of fruit, vegetables, meat and poultry provide alternative sources of food products that Singapore can source from as well. He also notes that suppliers in the Philippines are improving their processes to comply with Singapore's trading requirements.
The Philippines Board of Investments (BOI) also released figures indicating a surge in investments pouring into the country, with cumulative total approved investments reaching 286.7 billion pesos (S$7.5 billion) from January to April 2019, a 46.5 per cent jump from 195.7 billion pesos during the same period last year.
Approved foreign investments into the island republic also jumped to 66.9 billion pesos from 2.9 billion pesos during the same period last year, with Singapore being the biggest foreign investor to date with 35.4 billion pesos, from just 38.7 million pesos the year before.
"Foreign investors remain confident in the country's business prospects as foreign capital continues to surge in the country, while domestic investors remain upbeat as domestic capital continued its steady growth," said Trade Secretary and BOI Chairman Ramon Lopez.
Domestic investments also showed healthy growth with a 14 per cent increase to 219.7 billion pesos compared to 192.8 billion pesos last year during the same period.
As investments continue to grow, powering the Philippines' economy and providing a stable market, its favourable regional location among its Asian neighbours make it even more attractive for its neighbours to do business with it too.
Sustained economic growth with GDP consistently growing by more than 6 per cent each year since 2012, and with a 6.8 per cent growth forecast for this year, economic outlook looks great. Couple that with the recent news of international debt watcher S&P Global upgrading the country's credit rating to BBB+ from BBB, indicating a stable outlook and reaffirming the country's creditworthiness.
This upgrade acknowledges the implementation of major policy and infrastructure reforms aimed to boost economic growth, such as laws on tax reform, changes to ease doing business and relaxing the foreign investment negative list.
"The Philippines is one of the most dynamic economies in the East Asia and the Pacific region. With increasing urbanisation, a growing middle-income class, and a large and young population, the Philippines' economic dynamism is rooted in strong consumer demand supported by improving real incomes and robust remittances," says Mr Yap.
A key contributor to the nation's economy comes from remittances from the more than 10 million Filipinos working overseas, which in turn drives consumer spending. The total number of remittances in the first quarter of this year amounted to US$8.1 billion.
Mr Yap adds that its young, urban population is also a "demographic sweet spot" - the country's median age is 24.3 among a population of 107.9 million, with most of its young people being upwardly mobile and active for the next 30 to 40 years.
All these provide a large talent pool for employers to choose from. Moreover, there are 640,000 university graduates each year across a range of studies and with English being the country's second language, it lowers barriers to communication. The country's low cost of living is also another attractive factor for foreigners, he adds.
"The Filipino workforce is highly-educated and proficient in English, customer-oriented, highly trainable with a huge learning curve, adaptable to universal cultures, and highly committed and loyal to their work. These are traits that employers highly value," says Mr Yap.
There are more than 180 Singapore companies that currently have operations in the Philippine Economic Zone Authority (PEZA) industrial estates. Singaporean startups and tech-related companies which have established a presence include Carousell, Grab, Shopee, Shopback and SGAG.
New laws were also passed last year to ease doing business and investment in the Philippines.
The Ease of Doing Business and Efficient Government Service Delivery Act of 2018 simplifies the requirements and reduces processing time for business registrations and business license applications. Another is the Revised Corporation Code of the Philippines which simplifies corporate registration, improves corporate governance and protects minority shareholders.
Foreigners also have full ownership of investments and activities in certain industries, thanks to the 11th Regular Foreign Investment Negative List introduced in October last year. These include Internet businesses, wellness centres, training centres engaged in short-term and high-level skills development not part of the formal education system and adjustment, lending, financing companies and investment houses.
The list also allows foreigners to own up to 40 per cent of contracts for the construction and repair of locally-funded public works, except certain infrastructure and development projects.
According to Enterprise Singapore, Singapore firms can enter the Philippine market through 100 per cent foreign-owned enterprise (for industries that are not included in the negative list), joint venture agreements or a business cooperation contract with a local partner.
SETTING THE SCENE
The country's infrastructure is also making huge improvements with the introduction of the Duterte government's ambitious Build Build Build programme in 2017 costing US$180 billion.
It involves the building of 75 flagship projects, of which construction is ongoing for 44 of them. The projects span various sectors in aviation, transport, water and infrastructure and includes the construction of six airports, nine railways, three bus rapid transits, 32 roads and bridges and four seaports, improving connectivity and accessibility between the country's sprawling towns and provinces. This includes the major Metro Manila Subway Project, one of the biggest projects of the programme.
The programme also includes the construction of four energy facilities to ensure a steady power supply at lower prices, 10 water resource projects such as irrigation systems to improve agricultural output and five flood control facilities.
These projects definitely provide room for companies to enter the Philippines under the public-private partnership model. The Philippines also placed second in The Economist Intelligence Unit's ranking of countries most conducive to public-private partnership.
Several Singapore companies are already working on projects or bids - for example, Changi Airport is working to rehabilitate the Ninoy Aquino International Airport. Singapore is also helping the Philippines develop an intelligent transport system to ease metro Manila's infamous traffic jams.
Water management and utilities solutions are also other areas for companies to enter the market as the Philippines faces risk of water shortage within the next ten years.
All these infrastructure projects would undoubtedly help boost tourism too, which is one of the main drivers of the country's economy contributing 12.2 per cent of GDP and making up more than 13 per cent of the country's workforce.
A recent 2019 Tourism Summit highlighted the potential of the Philippines and Asean as a tourism hub and how to drive the Asean region as a single tourism destination.
The Philippines is also partnering Japan, one of its biggest partners on infrastructure projects, under the Build Build Build programme. Both countries have already signed nine loan agreements to develop infrastructure, transport and environment projects.
These include projects at different phases such as the Metro Manila Subway Project, construction of the new Bohol Airport and sustainable environment protection, maritime safety capability improvement for the Philippines Coast Guard, the Pasig-Marikina River Channel Improvement Project, Cavite industrial area flood risk management and North-South commuter railway extension.
A new loan agreement to develop the Mindanao Road Network Development Project is expected to be signed during a meeting between Japanese and Philippine officials, during the 8th Japan-Philippines Joint Committee on Infrastructure Development and Economic Cooperation later this month.
Japan also announced an extension of a grant assistance for peace and development projects in the conflict-affected Mindanao.
With all these developments, sustainability is an issue to manage as well. New Clark City is slated to be the Philippines' first sustainable city to be built by 2022. A partnership between Bases Conversion and Development Authority, Singapore urban developer Surbana Jurong and Japan Overseas Infrastructure Investment Corporation for Transport and Urban Development will see the construction of the nation's first smart, sustainable and disaster-resilient city.
It will be located within the Clark Special Economic Zone and infrastructure such as a Manila-Clark Railway, fully-integrated infrastructure for power, water, sewerage, information and communication technology, security and traffic management.
Celebrating cultural exchange
TO CELEBRATE 50 years of diplomatic relations, commemorative stamps featuring butterfly species representing both countries were jointly issued by the Philippine Postal Corporation and SingPost.
A pair of endangered Philippine eagles are also currently on a 10-year loan to Wildlife Reserves Singapore. They will be housed at Jurong Bird Park in an effort to get them to breed and conserve the species.
The embassy is also organising several events. These include:
- A performance by world-renowned choir The Philippine Madrigal Singers at The Esplanade on June 23;
- A Philippine food festival held at the Mandarin Orchard hotel from June 23 to 30;
- A Philippine film festival held at the National University of Singapore on Nov 12 to 15;
- Plans are also underway for a tourism event and business-investment conference later in the year.