PH FDI magnet

Fitch unit sees more FDIs in Philippines

Lawrence Agcaoili

The Philippine Star

28 July 2019

Tax reform, free trade deals expected to provide boost

MANILA, Philippines — The tax reform program in the country is seen boosting the country’s chances of bagging more foreign direct investments (FDI) , according to the research arm of the Fitch Group.

In its latest industry trend analysis, Fitch Solutions Macro Research said tax reforms in the Philippines would attract foreign investments particularly in the field of medical devices..File

In its latest industry trend analysis, Fitch Solutions Macro Research said tax reforms in the Philippines would attract foreign investments particularly in the field of medical devices.

“The tax reform program in the Philippines will boost the country’s attractiveness and encourage foreign investment. The Philippines currently has the second highest corporate tax rate in East And Southeast Asia,” Fitch Solutions said.

Fitch Solutions said FDIs in the country are somewhat hindered by a high fiscal burden through the high tax rates, which pose operational headwinds to firms and create barriers to investment.

Under the proposed tax reforms, the government intends to reduce corporate tax to 20 percent from 30 percent over 10 years from 2021, as well as reducing the number of capital income tax rates to 42 from 80.

“We believe that this will benefit medical device companies and boost foreign investment, as the tax reforms promote a more business friendly environment in the Philippines,” Fitch Solutions said.

The free trade agreements (FTAs) are also seen further boosting the country’s competitiveness and ease of trading for businesses.

For one, Trade Secretary Ramon Lopez held talks with Terumo last March to discuss the company’s plans to expand production of IV catheters at its manufacturing plant in Laguna Technopark in  Biñan, Laguna.

This follows the  approval of the Tax Reform for Acceleration and Inclusion Package 2 (TRAIN-2) in 2018, and as of 2019, the Duterte administration has remained optimistic that all packages of the proposed comprehensive tax reform program will be approved by 2020.

“On the other hand, the extent to which companies will benefit from the tax reforms will be limited by the proposed changes in investment incentives. We note that there have already been reports of some firms putting on hold their planned investments amid concerns of the proposed changes in the incentives regime,” it said.

Fitch Solutions said the changes include shortening income tax holidays for companies, as well as removing the five percent tax incentive on gross income earned, which companies registered with the Philippine Economic Zone Authority (PEZA) can claim.

“Businesses investing in the Philippines will benefit from a broad range of FTAs. Regional trade for medical device companies in the Philippines is facilitated by the country’s membership of the ASEAN, which has reduced or removed tariff and non-tariff trade barriers for most goods in recent years,” it said.

The ASEAN has also inked FTAs with some of the Philippines’ major trade partners, including China, Japan and South Korea. This will continue to boost the country’s competitiveness and ease the trading process for businesses, making it a more attractive destination for medical device companies.         

PH an outlier in AsPac

PHL an outlier in slowing Asia-Pacific M&A  market

Arra B. Francia
BusinessWorld
04 July 2019

THE PHILIPPINES was the fastest-growing market in the Asia- Pacific (APAC) region ex-Japan in terms of mergers and acquisitions (M&A) last semester, driven by the consolidation of one of the country’s largest cement players.

In its Global & Regional M&A Report for the first half of 2019, media firm Mergermarket revealed that the value of M&A deals in the country soared by 398.2% or $2.2 billion during the period.

This was primarily driven by conglomerate San Miguel Corp. (SMC)’s acquisition of an 85.7% stake in Holcim Philippines, Inc. from LafargeHolcim Ltd.

“The surge in the Philippines was largely driven by the flagship ‘Build, Build, Build’ campaign of President Rodrigo Duterte, which is spurring consolidation among cement players,” Mergermarket said in its report.

Holcim Philippines disclosed in May that SMC has agreed to acquire 85.7% of the firm for $2.15 billion, making it the biggest M&A deal in the local cement industry. The sale of LafargeHolcim’s Philippine assets is part of its rationalization program to exit from the “hyper competitive arena in Southeast Asia.”

The Philippines defied the slowdown seen in the region as well as in individual markets. Mergermarket noted that dealmaking “slowed down to levels unseen since 2013,” attributing the decline to the escalating trade war between the United States and China.

APAC ex-Japan tallied 1,525 deals last semester worth $241 billion, resulting in a drop in global market share to 13.4% from 18.6% in the same period last year.

China and Hong Kong accounted for more than half of the region’s total deal value, although deals from the former dropped by 44.7% year on year.

Deals in Hong Kong meanwhile dipped by 11.1%.

India followed as the largest M&A market, despite also posting a 52.8% decrease to $33.5 billion.

Southeast Asia showed a more favorable performance in the same period, with Singapore increasing by 154% to $17.1 billion for the period. Indonesia picked up by 88.6% to $6.6 billion, while Malaysia jumped by 16.4% to $3.7 billion.

In terms of sector, consumer-related transactions booked a 7.6% increase to $23.2 billion from 144 deals. The technology sector dropped by 66% to $22.9 billion, “as the tech war between the US and China is threatening to disrupt the supply chain and create a digital iron curtain between countries using US technologies and those who adopt Chinese ones.”

Meanwhile, Mergermarket also said that private equity (PE) buyouts appear “bleak and is expected to worsen in the near future.” PE buyouts amounted to $28.8 billion in the first half, 57% down from last year’s $67.1 billion. PE exits were also weak at $28.25 billion, 62% lower than last year’s $73.4 billion. — Arra B. Francia

PH as global diving destination

Positioning the Philippines as global diving destination

By

BusinessMirror

23 June 2019

The Philippines is gaining popularity as one of the world’s best destinations for recreational and professional diving. To help further cement this reputation, the Tourism Promotions Board (TPB) Philippines, marketing arm of the Department of Tourism (DOT), continues to exhaust aggressive efforts in promoting the Philippines as a diving destination.

Diving with butanding

The TPB has successfully made its presence known in numerous international dive-related events, such as the Marine Diving Fair (MDF), the largest dive resort and consumer fair focused on scuba diving and travel overseas; Asia Dive Expo 2019 (Adex), the longest-running and largest dive expo in Asia; and Diving, Resort and Travel Expo Shanghai (DRT).

Held in Japan, the MDF had over 200 exhibiting companies from 50 countries and regions all over the world, including the Philippines which had one of the largest booths. Some 50,000 visitors, mostly diving enthusiasts, attended the fair.

Coral reef diving

At Adex, the Philippine representatives promoted the new and existing diving destinations in the country and also learned more about water sports in general from distinguished scientists, equipment manufacturers, marine conservationists, and underwater photographers and videographers.

The DRT in Shanghai had over 200 exhibitors and more than 40,000 participants. The Philippine participants showcased local diving products and conducted product presentations which included business-to-business (B2B) networking among Chinese dive counterparts.

Philippines offers rich biodiversity for deep diving

As a result, the Philippine participants were able to learn more about the latest developments in water sports and strengthen ties with Japanese media, dive clubs and operators, and diving enthusiasts. Moreover, they were able to showcase Philippine diving products through product presentations and conduct B2B networking among regional counterparts in China.

PH's Asia-Pacific Top Universities

UP, DLSU among top universities in Asia Pacific 

CNN Philippines| 21February 2019

Metro Manila —  Two Philippine universities were included among the top educational institutions in the Asia-Pacific region, according to London-based data provider Times Higher Education (THE).

Results published on Wednesday showed that the University of the Philippines (UP) and the De La Salle University (DLSU) were in the top 300 schools of the region.

UP was at 101st-110th bracket, an improvement from its 2018 ranking of 151-160.

DLSU joined the list at the 201st-250th bracket. The Taft-based institution was unranked last year.

China's Tsinghua University rose to the top spot from its second place in 2018. It displaced the National University of Singapore which dropped to No. 2.

The University of Melbourne came in third.

The Hong Kong University of Science and Technology and the University of Hong Kong were in fourth and fifth spots.

Japan listed the most number of schools in the rankings, with 103 of its universities featured.

The Asia-Pacific University Rankings analyzed universities across East Asia, Southeast Asia, and Oceania. The featured schools represented 13 countries.

UP and DLSU were also the only Philippine universities in the Emerging Economies for 2019 of the same data provider.

PH to lead Asian growth

Philippine economic growth to lead Asia in 2019: HSBC


ABS-CBN News
18 February 2019

MANILA -- The Philippine economy will continue to grow faster than its Asian peers this year, notwithstanding global and local risks, HSBC said Monday.

Inflation is easing and is likely to settle at less than 4 percent at the end of the year, but growth could be affected by possible oil and food price shocks, said Frederic Neumann, HSBC managing director and co-head of Asian economics research.

The failure of the US and China to settle their trade spat could deal financial markets with a "confidence shock." Slowing growth in China, Japan and Europe could weigh on exports, he said.

"The Philippines will lead in absolute growth terms," Neumann told ANC's Market Edge. Consumption will likely pick up in Indonesia, he said.

One million Chinese tourists flock PH

Over 1 mln Chinese tourists visit Philippines in first 10 months of 2018 


Xinhua News
20 December 2018

MANILA, Dec. 20 (Xinhua) -- Nearly 1.06 million Chinese tourists visited the Philippines in the first 10 months of this year, making China the Philippines' second largest source market of foreign tourists, government data showed on Thursday.

The Philippine Department of Tourism (DOT) said in a report that Chinese tourists arrivals from January to October 2018 accounted for 18.02 percent of the total foreign tourists that visited this archipelagic country.

DOT data showed that only 810,807 Chinese tourists visited the Philippines from January to October 2017.

From January to October of this year, the report said that around 5.82 million international tourists visited the Philippines.

The DOT said South Korean nationals ranked the first in the number of tourist arrivals in the country from January to October with 1.29 million or 22.04 percent of the total arrivals. The United States came third with 850,735 tourist arrivals from January to October 2018 followed by Japan 530,228 arrivals.

Tourism has now become one of the most critical support industries of the Philippines, and it is one of the sectors that has benefitted with Philippines' renewed relationship with China. A growing Chinese tourist arrival was noted for the past three years.

From 490,000 in 2015 and 675,000 Chinese tourists in 2016, the number posted a significant increase in 2017 with 968,000 tourist arrivals.

The Philippines' target for 2018 is to bring in 1.5 million tourists from China.

Asia's top gender equality country

What Asia can learn from the Philippines
Poor country's success in gender equality puts richer states to shame


William Pesek
Nikkei Asian Review | 20 December 2018


The Philippines does not often find itself cast as an economic role model. But when it comes to gender empowerment it has Japan and South Korea, and even the U.S., looking on in awe.

The Philippines has been ranked No. 1 in Asia in gender equality. (NurPhoto/Getty Images)   © Getty Images

The Philippines does not often find itself cast as an economic role model. But when it comes to gender empowerment it has Japan and South Korea, and even the U.S., looking on in awe.

In the World Economic Forum's latest equality index, the Philippines was the only Asian nation to crack the top 10 -- eighth place. You have to scroll down 59 rungs to find the next significant Southeast Asian economy -- Singapore on 67. The U.S. comes in at 51 and China on 103.

Nor is this a flash in the pan. Manila has excelled in the WEF's gender reports since they were launched in 2006. It does particularly well in metrics including education, wage equality and political participation. And in doing so, it offers pointers for a region with a poor track record of advancing its female labor force.

This can seem a bit of a paradox because, as rabidly patriarchal as Asia can be, the region has seen the most female leaders anywhere. Bangladesh, India, Indonesia, Myanmar, Nepal, Pakistan, South Korea, Sri Lanka and Thailand all have been headed by women. The list arguably includes China, where Soong Ching Ling served as honorary president in the early 1980s. It most definitely includes the Philippines, which has had two female presidents.

At first sight, the Philippines might seem unpromising ground for a gender revolution. An agrarian, largely Roman Catholic, country is not typically a base for feminist groundswells. A Filipina just won one of those retrograde Miss Universe contests: her victory may be a one-off but the show's widespread popularity in the country is not. Few political leaders anywhere as fond as President Rodrigo Duterte telling sex jokes and trafficking in misogyny.

So, what has Manila done right? For one thing, it maintained the matriarchal lineage system of indigenous Filipinos that existed before Spain grabbed power in the mid-16 century. Women were then empowered, often engaging in trade and inheriting family land. Memories of that system survived American rule and still influence attitudes today.

For another, a succession of governments worked hard to narrow the economic gender gaps, particularly since the mid-1980s. To be sure, poverty and unemployment are still an acute challenge in the nation of 105 million people. The gap between rich and poor remains wide, every by regional standards. But the economic gender divide is much smaller than elsewhere in Southeast Asia as those women who can get jobs enjoy a high level of pay equality with men.

It helps that the education system is often based more on ones pecking order within families than sex. As a result, literacy rates for women tend to be slightly higher than men, an oddity in Southeast Asia.

"Access to education is unhampered by gender," explains Candice Gotianuy, chancellor of the University of Cebu, the nation's biggest privately-held college. "In poor families, it's usually the eldest child who gets to have an education regardless of gender. The firstborn then goes on to be family breadwinner. This sets the tone for men to see women as equals."

It is no coincidence that Corazon Aquino, the nation's first female president, worked to democratize opportunities. Gloria Arroyo's tenure as the second female leader saw passage of the Magna Carta for Women Act in 2009, which set quotas for women in government.

Role models are important. Seeing female presidents, vice presidents (Duterte's No. 2 is a woman), and CEOs running giant conglomerates equips young Filipinas to dream in ways their Japanese, Korean and Singaporean sisters might not. In 2017, women held 30% of seats in parliament. About 40% of senior management positions were held by women in 2017, the best showing in Southeast Asia, according to Grant Thornton.

Caveats abound. A big one: A key reason for narrower gender gaps is the nation's remittance economy. Unfortunately, people have long been the Philippines' main export. More than 10% of Filipinos work abroad in Hong Kong, Dubai, Riyadh or elsewhere. Females out-number men by 54% to 46%.

For sure, this testifies to the strength of the extended-family network. It enables many women to have children while earning a healthy income. But talent heading abroad depletes the local labor pool.

Keeping more female talent at home would enliven gross domestic product. McKinsey estimates that creating greater opportunity for women would add $40 billion to annual GDP by 2025, a big jump in a $313 billion economy.

It is an Asia-wide problem. Take Japan, where Prime Minister Shinzo Abe spent the last six years pushing "womenomics" but achieved not a lot.

Abe was partly inspired by the argument that Japan's GDP would increase 15% if female labor participation matched that of men. While Abe made some progress -- the rate for women is now 70% versus 80% for men -- women are still paid far less than men and remain rare in top posts.

Meanwhile, for all Manila's successes, Duterte's team should do more to level the playing field further. As Professor Michael Daniels of Canada's University of British Columbia sees it, the Philippines is top of the class because gender is a government priority and companies generally embrace diversity. The best way forward is more of the same -- even more women in positions of power, training programs and well-paid jobs at home.

Despite the gains made by women with education and jobs, around half of Filipinas still do not McKinsey's advice is to focus on supporting lower-income women. Kristine Romano, McKinsey managing partner, and her team think the Philippines could do better in six areas: boosting access to family-friendly policies in the workplace; devising programs to improve gender balance in male-dominated industries; strengthening incentives for women to remain in the local workplace; lowering barriers to labor-force participation by young mothers and single parents; making creative use of financial services to empower less-educated women; drastically improve maternal health in rural areas.

The same would apply in spades to Manila's South East Asian neighbors, such as Indonesia (85th by WEF metrics) and Malaysia (101st).

The tendency in this #MeToo era is to view gender largely through the lens of fairness and human rights. But the dismal economics at play in the world's most vibrant region requires urgent attention. For policymakers looking for clues on what works, Manila is a good a place to start.

PH to become 18th largest economy by 2037

Philippines to become 18th largest economy by 2037 — report

Philippine Star | 11 December 2018

This Nov. 9, 2018 file photo shows the Mandaluyong-Makati skyline. The Philippines is set to become the 18th largest economy in the world over the next twenty years, Capital Economics reported, citing the Southeast Asian nation’s young workforce.

The STAR/Michael Varcas

MANILA, Philippines — The Philippines is expected to become the 18th largest economy in the world over the next twenty years, Capital Economics reported, citing the Southeast Asian nation’s young workforce.

In its “Long-Term Global Economic Outlook” report released last week, the London-based economic research consultancy forecasts the Philippines’ nominal gross domestic product to hit $1.414 trillion by 2037.

Thirty economies were tracked in the report. In 2017, the Philippines was ranked 25th in terms of nominal GDP.

According to Capital Economics, the Philippine economy will likely outgrow Turkey, Poland, Thailand, UAE, Egypt, Colombia, South Africa, Argentina, Czech Republic, Angola, Morocco and Kenya two decades from now.

By 2037, Capital Economics sees the US dominating the top 17 economies based on nominal GDP, followed by China, India, Japan, Germany, the UK, France, Mexico, South Korea, Brazil, Canada, Australia, Italy, Indonesia, Russia, Nigeria and Saudi Arabia, respectively.

“Growth in Emerging Asia is likely to slow over the coming decades due to a combination of less favourable demographics and reduced scope for catch-up,” the consultancy said.

“Meanwhile, working age populations will still grow at a fairly rapid pace in countries such as the Philippines, Malaysia and India,” it added.

The Philippines had enjoyed uninterrupted growth in the past quarters, thanks to benign inflation in the previous years that had given the central bank enough room to keep interest rates low.

In the same report, Capital Economics flagged weakening investor appetite in the Philippines due to President Rodrigo Duterte’s leadership style.

“There are signs that the election of President Duterte in the Philippines is scaring off foreign investors and the situation is unlikely to improve when he is gone,” it said.

“The country has a poor history when it comes to electing competent governments,” it added. — Ian Nicolas Cigaral

Asia-Pacific's Most Optimistic Workers

LinkedIn: Filipinos among most confident in Asia-Pacific on opportunities to get ahead 

Manila Standard
28 November 2018


LinkedIn, the world’s largest professional network, has just revealed its inaugural LinkedIn Opportunity Index in the Asia Pacific region where it has more than 153 million members including six million in the Philippines.

The Index is a composite measure that seeks to understand how people perceive opportunity and more importantly, barriers that may prevent them from getting to those opportunities. The research surveyed over 11,000 respondents in nine markets in the Asia Pacific region - Australia, Chinese Mainland, Hong Kong, India, Indonesia, Japan, Malaysia, the Philippines, and Singapore.

The Philippines ranked third along with the Chinese Mainland on the LinkedIn Opportunity Index, with Indonesia and India taking the top two spots.

On the other hand, more developed markets such as Japan, Hong Kong, and Australia trailed in the Index as people in these markets expressed concerns over the economic outlook, and generally felt more cautious about their chances of accessing and achieving success with opportunities that are relevant to them.

“We believe access to opportunity should be universal and for everyone. With the inaugural LinkedIn Opportunity Index, our aim is to gain an insight into the aspirations of people across the Asia Pacific region, how they feel about the opportunities they want to pursue, as well as the barriers that may stand in their way. The growing workforce in the region is a key asset that, if harnessed effectively, is going to continue to drive the economies. Over time, by tracking people’s perception of opportunity and the barriers they face, we hope we can continue to facilitate more of a balance between demand and supply in the opportunity marketplace,” said Olivier Legrand, Managing Director, LinkedIn in Asia Pacific.

Key Highlights of LinkedIn Opportunity Index 2018:

- Starting own business is top opportunity for respondents in the Philippines

More than half, or 53 percent, of respondents in the Philippines see “starting my own business” as their definition of opportunity. They are similar to respondents in Indonesia (50%) who are interested in entrepreneurial pursuits. In contrast, respondents in Australia (13%), Hong Kong (13%) and Japan (7%) are least likely to embark on new ventures.

Similar to many respondents in APAC, many respondents in the Philippines hope to achieve or maintain work-life balance. A significant 44 percent of respondents in the country have identified “having a job which offers good work-life balance” as their ultimate definition of opportunity, slightly above the APAC average of 40 percent.

A significant 37 percent of respondents in the Philippines also interpret their ultimate opportunity as being able to learn a new skill. In an environment concerned with the impact of AI/automation and other shifts in the labour ecosystem, professionals also recognise that with jobs rapidly evolving, they need to upskill to stay relevant.

- Respondents in the Philippines cite financial status as top barrier to opportunity

Similar to the rest of APAC, a significant number of respondents in Philippines (46 percent) believe that their less optimal financial situation is the top obstacle to their access to opportunity.

While APAC respondents cited barriers to opportunity such as lack of a strong network and connections, a difficult job market, and lack of required professional skills, respondents in the Philippines ranked innate or psychological reasons such as fear of failure (24 percent) and lack of confidence (20 percent) as bigger hurdles to overcome.

- The Philippines believes diligence is currency to get ahead in life

Similar to more than 90 percent of APAC respondents, 96 percent of respondents in the Philippines believe in working hard to get ahead in life. Other attributes respondents in the country consider as important to advance in life include the willingness to embrace change (93 percent), social equality (91 percent), level of education (87 percent), and knowing the right people or having the right connections (85 percent).

“The barriers to realising opportunities in life are very real, and despite the diversity of the Asia Pacific region, there are more similarities than differences when it comes to our hopes and aspirations. The good news is that no matter what opportunities mean for each one of us, we can count on our community for help. Whether it is learning a new skill, networking or sharing guidance, we can all help one another to unlock and create opportunities,” added Legrand.