BUSINESS OPTIMISM in the Philippines slipped last quarter as against the year-ago level, although the country was still second-best in Southeast Asia, according to new research from Grant Thornton.
In its International Business Report (IBR), the firm said optimism in the country’s economy dipped to 81% of respondents from 88% — reflecting “reaction to the external economic environment, the moderate pace of economic growth and the short-term challenges” — though the latest reading was still eight points more than in 2018’s first-quarter.
But among the five covered members of the Association of Southeast Asian Nations (ASEAN), it said the figures “generally reflect the long-term view that the Philippines is on track towards becoming one of the top 20 economies in the world.”
The Philippines’ second-quarter reading was below Indonesia’s 98%, but better than Malaysia’s 52%, Singapore’s 32%, Thailand’s two percent.
Marivic C. Españo, chairperson and chief executive officer at P&A Grant Thornton, said in a statement: “The record levels of optimism… are undoubtedly pushed upwards by the continued growth of China, a close trading partner for many of the region’s economies.
“But what’s really encouraging to see is the greater focus on regional cooperation since the formation of the ASEAN Economic Community in 2015. Closer ties between businesses will provide the future fabric for growth in the region in the years ahead.”
For the Philippines, the local economic outlook and profitability were also significantly higher than the ASEAN averages, the firm said.
It cited “significant improvements” in major constraints to doing business in the Philippines.
“More and more organizations view regulations and red tape as less of a constraint: IBR ratings on red tape have dropped to a six-year low of 20%,” according to the same press release.
“Transport infrastructure is also reported to have greatly improved: views on transport infrastructure as a hindrance to business conduct have decreased to a six-year low of 14%.”
It also said an increasing number of businesses had reported that the lack of skilled workers is no longer a major constraint to doing business. IBR ratings on the lack of skilled workers have dropped by 20 percentage points to 36%.
Moreover, profitability expectations among Filipino businesses increased by 24 percentage points to 80%.
But it said fewer respondents expect to invest in research and development in the next 12 months, with expectations decreasing by 14 percentage points to 48%.
“There are spectacular growth opportunities for domestic and neighboring markets in Asia,” Grant Thornton said. “Demand and production capacities will continue to grow.”
It said 54% of the Filipino senior business executives who responded to the survey said that they intended to expand their business domestically in the next 12 months.
“Manufacturing has seen an upsurge in recent months, as more foreign investors look at the Philippines as a manufacturing hub in the long term,” it said, adding that more businesses expect to invest in plant and machinery at 70%. — Victor V. Saulon