Philippine Daily Inquirer
11:09 pm | Saturday, December 29th, 2012
A Filipino trader blows a horn during the last day of trading this year at the Philippine Stock Exchange in the financial district of Makati on Dec. 28, 2012. 2012 is claimed to be one of the best years ever for the Philippine economy, with the GDP expected to surpass 5 to 6 percent and the stock market ending the year on its 38th record high. AP/AARON FAVILA
MANILA, Philippines—The year 2012 is claimed to be one of the best years ever for the Philippine economy, with the gross domestic product expected to surpass the government’s target of 5 to 6 percent and the stock market ending the year on its 38th record high, making it the second-best performing market in Asia behind Thailand.
But 2013 is promising to be even better, according to the chief executive officers of some of the country’s largest corporations, who are already looking forward to faster economic growth and the Philippines finally getting investment grade status, which is expected to pave the way for more foreign investments pouring into the country.
“This year’s good economic fundamentals—benign inflation, high foreign exchange reserves and low interest rates—provide a good springboard for a rosy 2013 outlook. Hopefully, this translates into another credit rating improvement that would put the country to investment grade, something we haven’t seen in at least the last three decades. Having this upgrade could help change people’s perception outside the country on the Philippines as a place to put in their investments, which is the only economic indicator where we are not doing as well,” Holcim Philippines CEO Ed Sahagun said.
Antonio Moncupa Jr., president and chief executive officer of the EastWest Bank, was equally optimistic, saying that the “growth fairies seem to be favoring the country.”
“We made our plans for 2013 on the premise that the Philippine economy will do well. And we believe we stand on good foundation. We hear, feel, and see our loans and deposits customers talk about how well their businesses are doing. We expect the macro numbers—gross domestic product growth, loans-to-GDP ratio, the fiscal deficit, government revenue collections—to continue showing good numbers,” Moncupa said, “Overall, we expect the momentum of domestic demand and the country’s good macroeconomic numbers to outweigh the uncertainties in Western economies. Given our positive economic outlook, we will proceed with our expansion programs.”
Added boost
Moncupa added that the midterm elections in 2013 should provide the economy—which the government has projected as growing by 6 and 7 percent—with an added boost as it would provide another opportunity to pump prime the economy with increased expenditures.
Jose Concepcion III, chief executive officer of food and beverage giant RFM Corp., and Partho Chakrabarti, president of Pepsi-Cola Products Philippines Inc., made the same prediction.
Concepcion said that 2013 would be a “super-year” for the Philippines, partly because elections would help boost consumption. As a result, the stock market should hit even more records in 2013. Chakrabarti, meanwhile, said that the overall optimism of the population would result in increased investment and spending by both the companies and individuals.
“Confidence will continue to increase in 2013 and should be higher than 2012. The increased activities around the elections will further stimulate the economy in the first half,” said Chakrabarti, who also predicted that the beverage industry would grow in 2013 at a faster rate than that seen over the past two years.
Riza Mantaring, CEO of Sun Life Financial Philippines, provided an equally rosy projection for the Philippines in 2013, saying that the Philippine economy would continue to “grow strongly” because of strong domestic consumption.
“It is already the third-largest of the $1 trillion+ Asean consumer market, and we expect to continue to move up as we have a young and still growing population with growing purchasing power,” said Mantaring.
Stronger economy
San Miguel Corp. head Ramon Ang, on the other hand, pointed out that the economy would continue to be stronger mainly because “investors believe in our President and his good image.”
The Philippine Chamber of Commerce and Industry (PCCI), the largest umbrella organization of more than 30,000 enterprises in the country, likewise projected a stronger Philippine economy in 2013 because of two significant events in 2013—the upcoming midterm elections in May and the start of the second term of US President Barrack Obama in January.
“The Philippine economy in 2012 has shown resiliency and strength amid the economic crisis in Europe and territorial disputes in the region. This is mainly due to our government’s effective fiscal management policies, which created a stronger than expected investors’ interest in the Philippines. Now is the perfect time to pursue more reforms and start developing our domestic industries considering two important events are happening during the first half of 2013, the start of Obama’s second term in the office and our midterm elections,” said PCCI president Miguel B. Varela.
The United States will still influence the Philippine economy, according to the PCCI, as it remains among the biggest sources of investments and also among the biggest markets of Philippine goods.
Need for more reforms
Maynilad Water Services CEO Ricky Vargas also stressed the need to continue the reforms and to pursue projects to maintain the growth, especially the public-private partnership (PPP) infrastructure projects.
“Our country needs infrastructure investments that will support businesses and improve lives. If the government can fast-track PPP projects next year, then we may see an even more vibrant Philippine economy in 2013. We are already on the right path. We just have to stay on track and move faster so more Filipinos can experience first-hand what progress feels like,” said Vargas, adding that 2013 for Maynilad marks the start of its “expansion era.”
“Additionally, while the ‘daang matuwid’ strategy of the government has been successful in curbing graft and corruption in the bureaucracy, there is a need to further strengthen the implementation of this strategy. Otherwise, the gains achieved in the last few years could be undermined or negated,” Vargas stressed.
Guarded optimism
Manila North Tollways Corp. CEO Ramoncito Fernandez, meanwhile, looks forward to 2013 with “guarded optimism.”
“The national economy is poised to repeat its growth but to sustain that growth, the country needs more foreign direct investments and infrastructure spending,” Fernandez stressed.
Mantaring identified the external factors that could derail growth in 2013.
“In terms of risk, a growing economy usually attracts inflation, but we feel the government has put in place enough measures to mitigate this risk at the moment. An abrupt appreciation of the peso is also a threat to the business process outsourcing sector as it lessens its competitiveness. Of course, external threats such as the US fiscal cliff, the lingering euro debt crisis, and an economic slowdown in China can also negatively impact our economy, particularly the export sector. However, we expect the Philippines, along with Thailand and Indonesia, to be less affected by a global economic slowdown as these economies are consumption-led. The expected increase in government spending will also help support growth,” she said.
PCCI also emphasized the need to fine-tune policies to support programs that will revive the weakening industrial sector. It also urged the government to carry out more support in terms of infrastructure, incentives and market linkages in the agriculture sector. It also pushed for the implementation of various PPP projects, which are supposed to anchor government and private sector cooperation in important development programs.
But overall, PCCI said in a statement that it saw bright spots in 2013 given the continuing interest of fund managers and investors alike on the Philippine economy.
“Given the significant milestones we have achieved in assisting potential investors in the country and if we are to base on the various delegations and missions we received or organized this year, coming from countries like India, China, Russia, Bahrain, Turkey, Taiwan, Korea, Japan, among others, we definitely see a string of investment interests and opportunities in the country. Our assessment is that the economy is headed towards the right direction,” said PCCI president Miguel Varela.
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Tags: Antonio Moncupa Jr. , Business , business and finance , chief executive officers , consumption , corporations , Credit rating , East West Bank , economic growth , economy , Ed Sahagun , foreign direct investments , Gross Domestic Product , Holcim Philippines , Jose Concepcion III , Manila North Tollways Corp. , Maynilad Water Services , Miguel B. Varela , Partho Chakrabarti , Pepsi-Cola Products Philippines Inc. , Philippine Chamber of Commerce and Industry (PCCI) , Philippines , Ramon Ang , Ramoncito Fernandez , rfm corp. , Ricky Vargas , Riza Mantaring , San Miguel Corp. , Sun Life Financial-Philippines
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