Bernardo M. Villegas
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The Return of US Investors

          Despite the admirable efforts of the American Chamber of Commerce of the Philippines to promote more U.S. investments in our country, foreign direct investments from the U.S. have been lagging behind other nationalities over the last few years.  South Korean, Japanese and European investors have been more bullish in the recent past, with some notable exceptions in the energy sector where one of the largest energy firms in the U.S., AES, plowed in one billion dollars four years ago in purchasing the coal-powered plant in Masinloc, Zambales and is planning to invest in another 600-megawatt plant if the appropriate policy is in place.  This apparent reticence of U.S. investors to invest more heavily in the Philippines motivated me and a handful of top executives from the private sector to offer our services to Ambassador Jose Cuisia to organize a nondeal investment road show to three key cities in the U.S., i.e. Washington, D.C., New York City and San Francisco City.  The results exceeded our expectations.

          The Washington, D.C. leg was co-sponsored by the US-ASEAN Business Council.  It was a very appropriate forum because our message was that the Philippines is part of the large free market of the ASEAN Free Trade Area (AFTA) and is a most strategic gateway to a total population of close to 700 million consumers.  I focused especially on what I call the VIP emerging market (Vietnam, Indonesia, and the Philippines) that can offer a total consumer market of more than 400 million and can compete with the two giants of the region, China and India, in attracting foreign investors.  My message especially to the Washington, D.C. audience was to integrate their operations in the VIP region with their headquarters in the Philippines.  Those who accompanied me were Isidro Consunji of the DMCI construction and real estate conglomerate; Mr. Bienvenido Araw, Vice President for Projects and Organizational Development of Benguet Corporation; and Jesus Zulueta, Managing Partner of ZMG Ward Howell.  Mr. Consunji gave a presentation on the construction, real estate, energy, and tourism sectors. Mr. Araw  excited the crowd of more than 60 in each city about how the Philippines sits on a mining wealth worth about $840 billion in gold, copper and nickel deposits.  Mr. Zulueta described the Philippines' competitive advantage in global outsourcing, which made the country as the world's number one call center destination and a major player in the non-voice services.

          When the road show moved to New York, the news was rife that in his State of the Nation Address, President Obama promised that he would encourage "insourcing", i.e. bring back the jobs to the U.S.  There would be tax incentives for American companies not to outsource their business process and knowledge process services.  I concurred with the retort given by Mr. Zulueta that the American corporations would be the first to lobby for such a policy not to be legislated in the U.S. Congress.  In an economy that is growing slowly, the only way American firms can protect their bottom line is to significantly reduce their costs.  Outsourcing is a major strategy to reduce operating and overhead costs.  Not all the tax incentives can counter the huge savings in labor, real estate and other costs from which American firms benefit by outsourcing business services to such countries as India, the Philippines, and China.  Mr. Zulueta was especially confident that today's total employment of 415,000 workers in voice/call centers in the Philippines will balloon to 1.3 million employees by 2016.  An additional 3.0 million people are indirectly employed in allied industries. Each of the speakers had his hands full in answering specific questions about how to actually start the process of investing in the Philippines, especially in infrastructures like airports, bridges, toll roads and power plants.

          The New York economic briefing was co-sponsored by the Philippine American Chamber of Commerce of New York, headed by Mr. Rene Meilly.  It was held in the very spacious Kalayaan Hall of the Philippine Center in mid-Manhattan. We were told by the staff of the New York consulate headed by Ambassador Mario de Leon that they had never experienced a similar event in which the New Yorkers stayed till the very end, even lingering to ask more questions from the individual speakers.  It is customary for business people in New York, especially investment bankers, to rush to take their respective trains headed for home before briefings are over.  Their staying till the very end was an indication of their great interest in what is happening in the Philippines.  We could really confirm that the Philippines is back in the radar screen of U.S. investors.