Philippines eyes rosy economic future

Can the Philippines scale new economic heights? Volcano Mayon, Albay Province, Philippines. Source: Pixabay

The Philippines is trying to sell itself as a manufacturing hub to supplement its reputation for services in an attempt to take advantage of increasing Asean economic integration.

“Investors can view the Philippines as a gateway to the rest of the region as well as to Asean’s six free-trade partners in East Asia,” said a report called “Moving Across Borders: The Philippines and the Asean Economic Community”.

The 78-page report by auditing firm KPMG RG Manaba discussed the country’s prospects when the Asean Economic Community is established this month.

The report mentioned that the young population would attract manufacturers to the archipelago when they seek to establish a foothold in the new community.

“The English proficiency of Filipino workers is another advantage of the Philippines in the region,” it said.

The country has the second-highest labour costs in Asean, next to Malaysia, but KPMG said this would not be a problem if coupled with high productivity.

Cheap credit, enabled by the Philippines’ credit upgrades in recent years, was another positive. “Such rating signals a good financial reputation to potential foreign investors,” it said.

Its “competitive” property prices were the fourth lowest in the region.

The report said average price per square metre was US$3,160, compared to Thailand’s US$3,640 and Singapore’s US$15,250. It was, however, higher than Cambodia with US$2,910, Malaysia US$2,870 and Indonesia US$2,690.

International manufacturing investment in Asean reached an estimated US$41 billion in 2013, up 127.7 per cent from the US$18 billion invested in the previous year. In the Philippines, foreign direct investment rose by a fifth to US$4 billion during the same period.

Much of the investment was channelled into “lower quality, lower cost” vehicle equipment and components as well as food, drinks and tobacco.

“The challenge now is to move up to the higher quality and lower-cost category,” the report said.

Economists are observing next year’s election in the hope that recent economic gains will not be squandered.

A tough-talking, seven-term mayor, who is known for fighting crime in the insurgency-plagued southern Philippines, is the favourite to succeed President Benigno Aquino in May’s elections, according to polls.

Rodrigo Duterte, 70, mayor of Davao City, won 38 per cent support from the 1,200 respondents, the Social Weather Stations poll said.

Senator Grace Poe, who topped previous surveys, dropped to second with 21 per cent in a tie with Vice President Jejomar Binay, who was ahead earlier in the year.

Under Aquino, the Philippines has grown at more than 6 per cent on average, its best five-year record in four decades.

About 54 million Filipinos are registered to vote for a president, vice president and more than 18,000 other representatives in the elections which happen every six years.

Aquino’s chosen successor, former interior minister Manuel “Mar” Roxas, was fourth in the recent poll, falling from 20 per cent backing in September to 15 per cent.

Mayor Duterte is credited with turning around the reputation of crime-plagued Davao.

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