Page last updated at 08:14 CST6CDT, Wednesday, 10 June 2015 PH
The GDP annual increase of 6 to 7 percent that we have experienced over the last three years can be sustained over the next ten years or so on the basis of a consumption-led growth that is fuelled by OFW remittances, BPO/KPO earnings, domestic tourism and the renaissance of manufacturing as Japanese and Korean firms relocate to the Philippines from China. The upside is that the next Government can preside over an 8 to 10 percent growth if the investment to GDP ratio can be increased from the present mediocre 20 percent to at least 30 percent, the average in the East Asian region. In addition to a more decisive implementation of the Private Public Partnership (PPP) projects, this significant increase in investments will have to come from Foreign Direct Investments (FDIs) which can be attained if we amend the restrictive provisions of the Philippine Constitution.
Almost exactly one year before the next Presidential election in the Philippines, hundreds of shakers and movers of the Philippine and ASEAN economies will be examining the preparedness of the next government to maintain the strong growth and overall macroeconomic stability that now characterize the “New Asian Tiger.” Not a day passes when our country is not cited for being “the most resilient economy,” “the fastest growing economy in Southeast Asia,” and “a leading emerging market in the global economy.” We shall be even more in the limelight when we host the meeting of APEC leaders later this year. Thanks to the Financial Times and the First Metro Investment Corporation, an investment summit will be held on May 20, 2015 at the Makati Shangri-La, Manila to bring together international economists, senior government representatives, business consultants, investors, and business leaders to assess how major regional and global trends are impacting the Philippines now and in the immediate future. A very important part of the agenda of the Summit will focus on the implications of the launching of the ASEAN Economic Community (AEC) by the end of this current year and the nation’s role as APEC host.
The objectives of the ASEAN integration are well known: free flow of goods, services, investment, capital and people. At the forefront of the integration are free flows of trade and investment, promising more rapid economic growth through increased foreign direct investments. In fact, the ASEAN has already surpassed China in the flow of FDIs. There are, however, a number of challenges that will be addressed in the Summit. International trade and investment are heavily impacted by global currency movements (especially the appreciation of the US dollar) and other market volatility. In the ASEAN, some of the member countries fear that the proposed AEC may have negative consequences for their domestic economies, at least at the initial stages. A panel of experts will answer the following questions: How will individual member states benefit from the single market in the longer term, and how will this enable the region to strengthen its economic independence? What progress is being made in the harmonization of different tax systems across ASEAN? Are member states willing to make tariff cuts and lift trade barriers? What steps must be taken by Asia Pacific economies to ensure APEC initiatives involving economic sustainability and job creation are achieved? How may future free trade agreements amongst APEC members, such as the Trans Pacific Partnership (TPP), benefit the regional economies. Forming part of the panel are Secretary of Trade and Industry Gregory Domingo, ADB Vice President for East Asia Stephen Groff, and Roubini Global Economics Managing Director Don Hanna.
Then there is the question of the financial climate that is expected to prevail beyond the present Administration. Governor Amando Tetangco, Jr. of the BSP will deliver a keynote address which will be followed by a panel discussion on bank liberalization and financial sector integration. The discussants will address the main issues in the ASEAN Banking Integration Framework, a key pillar of ASEAN integration, whose aim is to achieve region-wide banking sector liberalization by 2020. Especially of interest to the local banking sector, whose size is dwarfed by its counterparts in our ASEAN neighbours, is the entrance of large foreign banks into local markets which will drive up standards in terms of regulation, products, services and the consumer experience, helping to increase capital expenditure and enhance the economy. The panel of expert will answer the following questions: How do current regulations and standards in the Philippines compare to those of other ASEAN countries? With the entrance of more foreign banks, what new products and services will enter the marketplace, and what improvements might investors and retail banking customers expect to see? Will local banks in ASEAN countries be able to survive in the face of heightened foreign competition and M&A activity? The discussants will be Roberto Juanchito Dispo, President, First Metro Investment Corporation; Noburu Kato, General Manager and Head, Investment Banking Asia, Sumitomo Mitsui Banking Corporation; Tim Leissner, Chairman, South East Asia, Vice Chairman, Investment Banking Asia Ex-Japan, Goldman Sachs; and Hans Sicat, President and CEO, Philippine Stock Exchange.
Assuming that the next Administration will meet the challenge of fully implementing all the PPP projects and spending a hundred percent of the budget allocated for infrastructures, it will be incumbent upon the private sector to compete on the international playing field by being prepared to embrace major market disruptors, from regional demographics changes and evolving consumer trends across the ASEAN, to global and industry-wide trends in e-commerce, social media, data and other digital developments. The panel discussion on “Embracing Market Disruptors to Drive Growth” will address the following questions: How can firms in the Philippines tap into emerging trends in consumer demand across the region? What are the benefits for corporates of embracing technological change, and how will this impact growth and competitiveness? What must the private and public sectors do to accommodate the growing demand for online and mobile offerings? To constitute this panel are Jesus B. Atencio, President and CEO, 8990 Holdings; Dado Banatao, Managing Partner, Tallwood Venture Capital; Kirren Tanna, Co-CEO, Asia Pacific Internet Group and myself. Those who want to attend the Summit may go to the following website: live.ft.com/ftphilippines. For comments, my email address is email@example.com.