Philippines: “A young and growing nation”

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Cristino Panlilio
Cristino L Panlilio, Department of Trade and Industry (DTI) Undersecretary and Board of Investments (BOI) Governor, Philippines

The Philippine economy is predicted to grow between 6 and 7 per cent annually over the next decade. Inside Investor sat down with the country’s Department of Trade and Industry (DTI) Undersecretary and Board of Investments (BOI) Governor Cristino L Panlilio to learn what this means for investors.

Q: Can you tell us about the main actions being undertaken by the DTI and BOI?

A: The DTI and the BOI have identified prime movers of the economy. We have created what we call investment priority plans (IPP). For example, if a company invests into specific industries, it will get income tax holidays and duty free the importation of capital equipment. The IPPs include mass housing, iron and steel, the BPO industry, automotive, shipbuilding, agribusiness, creative services and more.

Q: What kind of incentives do DTI and BOI offer to investors?

A: Government-supported incentives are available for investments into industries such as mining or renewable energy. The Clean Air Act provides incentives for investments that reduce pollution, while the Clean Water Act does the same for those investing into sewage and filtration systems. We have set up special economic zones to incentivise foreign investment which is supposed to lead in increasing purchasing power among the employed workers. It will be our job to provide a sustainable infrastructure there to make the access of industries easier. This will, in turn, lead to further job creation. That’s what we call economic velocity.

Q: What makes the Philippines attractive for investors?

A: We have identified several performance indicators for investing in the Philippines. The stock market has grown 20 per cent on average over the past 1.5 years, which made it one of the fastest growing in the world. Inward remittances climbed to $20.1 billion, coming from the 10 million Filipinos that are working abroad, contributing 9 per cent to our GDP. The BPO industry will be worth $15 billion in 2013, and merchandise exports are forecast to hit at least $55 billion this year. On top of this, our international capital reserves have reached $79 billion. Perhaps most notably, our average annual GDP growth over the next decade will be between 6 and 7 per cent. Our financial sector has one of the lowest non-performing loan ratios in the world. Our national credit standing is good, prompting Standard & Poor’s to move our credit rating to just below investment grade which augurs for a greater volume of investment once we  move up another notch. Our minimal national budget deficit is another point. And last but not least, the Filipinos themselves are our greatest advantage: we are an increasingly urbanised nation of rapidly growing youthful talents.

Q: What sort of investors is lured by your investment schemes?

A: Domestic investors have played a large role so far. By market capitalisation, our biggest investor is SM Group, the local retailer, followed by San Miguel, Ayala, a developer, Aboitiz and JG Summit, a diversified food, power plants and feed meal conglomerates, DMCI Holdings, a company diversified into coal mining, First Pacific Group and the Lopez Group, involved in telecommunications and energy infrastructure. These players invest heavily throughout the Philippines in infrastructure, energy, water distribution, and other industries. Our biggest foreign investors besides companies you’d be familiar with, such as Proctor & Gamble, Nestlé, General Electric, IBM and Coca-Cola, would be Asian investors, notably the Kuok Group. They have 13 property development projects here. They are now constructing their largest hotel in the Philippines and own Shangri-La Mactan, as well as a large mall in Metro Manila.

Q: How open are local institutions to working with investors from overseas?

A: Many of the domestic companies I just named are in joint ventures with foreign companies, such as Honda and Toyota. Almost all major businesses in the Philippines have foreign involvement.

Q: How are DTI and BOI promoting foreign direct investment?

A: The first six months of this year we have already received 23 inbound business missions, with an inbound mission being five or more companies, up from 18 missions throughout 2011. We have an aggressive foreign investment and trade attachés and an investment promotion group interacting with foreign investors all the time.

Q: Can you tell us where these missions came from?

A: The missions were from Israel, Turkey, Japan, China and South Korea, only to name a few.

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Reading Time: 3 minutes

Cristino L Panlilio, Department of Trade and Industry (DTI) Undersecretary and Board of Investments (BOI) Governor, Philippines

The Philippine economy is predicted to grow between 6 and 7 per cent annually over the next decade. Inside Investor sat down with the country’s Department of Trade and Industry (DTI) Undersecretary and Board of Investments (BOI) Governor Cristino L Panlilio to learn what this means for investors.

Reading Time: 3 minutes

Cristino Panlilio
Cristino L Panlilio, Department of Trade and Industry (DTI) Undersecretary and Board of Investments (BOI) Governor, Philippines

The Philippine economy is predicted to grow between 6 and 7 per cent annually over the next decade. Inside Investor sat down with the country’s Department of Trade and Industry (DTI) Undersecretary and Board of Investments (BOI) Governor Cristino L Panlilio to learn what this means for investors.

Q: Can you tell us about the main actions being undertaken by the DTI and BOI?

A: The DTI and the BOI have identified prime movers of the economy. We have created what we call investment priority plans (IPP). For example, if a company invests into specific industries, it will get income tax holidays and duty free the importation of capital equipment. The IPPs include mass housing, iron and steel, the BPO industry, automotive, shipbuilding, agribusiness, creative services and more.

Q: What kind of incentives do DTI and BOI offer to investors?

A: Government-supported incentives are available for investments into industries such as mining or renewable energy. The Clean Air Act provides incentives for investments that reduce pollution, while the Clean Water Act does the same for those investing into sewage and filtration systems. We have set up special economic zones to incentivise foreign investment which is supposed to lead in increasing purchasing power among the employed workers. It will be our job to provide a sustainable infrastructure there to make the access of industries easier. This will, in turn, lead to further job creation. That’s what we call economic velocity.

Q: What makes the Philippines attractive for investors?

A: We have identified several performance indicators for investing in the Philippines. The stock market has grown 20 per cent on average over the past 1.5 years, which made it one of the fastest growing in the world. Inward remittances climbed to $20.1 billion, coming from the 10 million Filipinos that are working abroad, contributing 9 per cent to our GDP. The BPO industry will be worth $15 billion in 2013, and merchandise exports are forecast to hit at least $55 billion this year. On top of this, our international capital reserves have reached $79 billion. Perhaps most notably, our average annual GDP growth over the next decade will be between 6 and 7 per cent. Our financial sector has one of the lowest non-performing loan ratios in the world. Our national credit standing is good, prompting Standard & Poor’s to move our credit rating to just below investment grade which augurs for a greater volume of investment once we  move up another notch. Our minimal national budget deficit is another point. And last but not least, the Filipinos themselves are our greatest advantage: we are an increasingly urbanised nation of rapidly growing youthful talents.

Q: What sort of investors is lured by your investment schemes?

A: Domestic investors have played a large role so far. By market capitalisation, our biggest investor is SM Group, the local retailer, followed by San Miguel, Ayala, a developer, Aboitiz and JG Summit, a diversified food, power plants and feed meal conglomerates, DMCI Holdings, a company diversified into coal mining, First Pacific Group and the Lopez Group, involved in telecommunications and energy infrastructure. These players invest heavily throughout the Philippines in infrastructure, energy, water distribution, and other industries. Our biggest foreign investors besides companies you’d be familiar with, such as Proctor & Gamble, Nestlé, General Electric, IBM and Coca-Cola, would be Asian investors, notably the Kuok Group. They have 13 property development projects here. They are now constructing their largest hotel in the Philippines and own Shangri-La Mactan, as well as a large mall in Metro Manila.

Q: How open are local institutions to working with investors from overseas?

A: Many of the domestic companies I just named are in joint ventures with foreign companies, such as Honda and Toyota. Almost all major businesses in the Philippines have foreign involvement.

Q: How are DTI and BOI promoting foreign direct investment?

A: The first six months of this year we have already received 23 inbound business missions, with an inbound mission being five or more companies, up from 18 missions throughout 2011. We have an aggressive foreign investment and trade attachés and an investment promotion group interacting with foreign investors all the time.

Q: Can you tell us where these missions came from?

A: The missions were from Israel, Turkey, Japan, China and South Korea, only to name a few.

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