THE PHILIPPINES is expected to be among Asia Pacific’s “biggest domestic investment winners” this year, according to an annual survey of multinational professional services provider PwC that nevertheless showed confidence among business leaders in the country slipping from 2016.
“The biggest domestic investment winners will be Vietnam, Russia, the Philippines, Indonesia and Malaysia,” PwC said in a statement from Da Nang, Vietnam on yesterday’s release of its 2017 APEC CEO Survey results in time for the Asia-Pacific Economic Cooperation (APEC) meetings there.
PwC got responses from a total of 1,412 chief executive officers (CEOs), “other top corporate officers and business specialists” — 77 from the Philippines — from APEC’s 21 member economies on May 9-July 14 via “online and paper methodology” as well as “in-depth interviews.”
Philippine results of the survey — PwC’s eighth — showed 49% of CEOs surveyed “very confident” about prospects of their companies’ revenue growth in their “principal economy” in the next 12 months and 45% “somewhat confident,” compared to 65% and 31%, respectively, in the 2016 survey.
The 2015 survey saw 51% of Philippine CEO respondents “very confident” about revenue prospects.
Philippine results this year were better than those of APEC as a whole, which showed 37% “very confident” in this regard, from 28% in 2015 and 2016, and 50% “somewhat confident” from 2016’s 49% and 2015’s 39%.
Across Southeast Asia, 36% of the region’s 445 respondents were “very confident” of their companies’ revenue growth over the next 12 months while 53% were “somewhat confident”.
This year’s report cited the Philippines, Indonesia, Malaysia, Russia and Vietnam as “APEC economies where CEOs are more likely to raise domestic investment”, with 73% of Philippine respondents (compared to APEC’s 58%) expecting “to increase spending at home”.
• 17% of Philippine CEOs were “more confident since 2016” of “launching a new product or service or entering a new line of business” and nine percent were “less confident” of doing so, compared to APEC’s 27% (27% also in ASEAN) and 17%, respectively;
• 12% were “more confident” of “increasing profit margins in domestic operations in your principal economy” and 31% were “less confident”, compared to APEC’s 26% (25% in ASEAN) and 29%, respectively;
• five percent were “more confident” of “forecasting compliance costs and tax liabilities in your principal economy” while 30% were “less confident”, against 17% (15% in ASEAN) and 24%, respectively, across Asia and the Pacific.
• nine percent were “more confident” of “expanding operations in Asia-Pacific economies outside your principal economy” while 14% were “less confident”, compared to APEC’s 24% (21% in ASEAN) and 18%, respectively.
• eight percent were “more confident” of “increasing profit margins in international operations” while 19% were “less confident”, compared to APEC’s 21% (20% in ASEAN) and 22%, respectively.
• five percent were “more confident” of “increasing exports” while 16% were “less confident”, against APEC’s 18% (13% in ASEAN) and 16%, respectively;
• and 12% were “more confident” of “securing the talent and skills to perform globally” and 19% were less so, compared to APEC’s 17% (17% also in ASEAN) and 23%, respectively.
“With confidence increasing, perceptions of the opportunities for innovation-driven growth have improved, but business leaders’ concern about their ability to secure the right skills to compete globally is increasing,” PwC said in its statement, noting that overall APEC confidence about revenue growth “is at its highest level in three years”.
“Automation is a key recurring theme in strategies for building the workforce of the future, with 58% automating certain functions, 40% investing in machine learning and emerging technologies and 41% identifying workers are skilled at using new automation tools,” it added.
“For ASEAN businesses, automation is high on the agenda, as the key building block in their strategy to develop a digital workforce.”
Philippine respondents were roughly in sync with the rest of the region in terms of global investment intentions, with 51% expecting to increase investments (55% across Asia and the Pacific), 43% expecting levels to be maintained (36%) and just one percent expecting a reduction (five percent in APEC).
But the Philippines did not figure among top Asia-Pacific destinations for business leaders’ planned overseas investment, with Vietnam (47% net increase — or percent that will increase investments minus percent that will reduce them), China (46%), Indonesia (45%), the United States (44%), Thailand (36%), Japan (35%), Hong Kong (33%), Singapore (31%), Malaysia (31%) and Australia (30%) top of mind in this regard.
Noting that the “Philippines isn’t in the top 10 investments areas”, Alexander B. Cabrera, chairman and senior partner of PwC member Isla Lipana & Co., said in a telephone interview yesterday that cross-border investments are “going to… Vietnam… Indonesia and China, US and Thailand.”
“But the multinational companies which are already in the Philippines, they are going to increase their investments here,” Mr. Cabrera clarified.
“So that’s part of the overall confidence because the Philippine CEOs are very optimistic on the revenue growth as early as the first quarter… it doesn’t mean that there will be a lag,” he added, noting that “[t]he Philippines is consistent in FDIs (foreign direct investments)…”
At the same time, Mr. Cabrera rattled off a few investor concerns the government has to address — particularly in “ease of doing business” — including honoring contracts, not changing rules in the middle of the game and lifting foreign equity limitations, as well as perceived lack of consistency in observing due process particularly in the anti-narcotics war. — with A. G. A. Mogato