Biz leaders still positive about PH despite uncertainties

By Kris Crismundo

September 3, 2018, 6:00 pm

MANILA -- Top business executives have kept their optimism in the Philippine economy and revenue prospects, but their fears on regulatory and political uncertainties are making them hold back on their expansion plans, the result of a business leaders’ survey showed.

The Philippine CEO Survey 2018 of Management Association of the Philippines (MAP) and PwC Philippines showed that 79 percent of local chief executive officers are positive that the country’s economic growth will exceed the ASEAN’s average gross domestic product (GDP) expansion for this year.

PwC Philippines Managing Partner for Deals and Corporate Finance Jade Roxas-Divinagracia said in a press conference Monday that the country’s GDP growth is expected at 6.5 percent by end-2018 while the average growth of the 10 ASEAN member states is projected at 5.2 percent.

“The Philippines remains to be a very attractive market itself with very high consumption levels, and of course the anticipated spending on the ‘Build, Build, Build’ Program,” Divinagracia said.

Aside from domestic consumption and infrastructure, CEOs said the economic growth will be backed by the business process outsourcing (BPO) and other activities in the services sector, remittances, investments, and global and social trends.

The optimism of CEOs in their respective businesses remains high, with 89 percent of the executives saying they are confident of the revenue growth prospects of their operations here.

However, the level of confidence of the CEOs declined from 92 percent last year.

Divinagracia explained that the survey was conducted from July to August when the country registered its five-year high inflation rates.

“It’s a combination of many things. Locally, higher inflation of course is a very high concern particularly during the months when the survey was done. Apart from that is the continuous weakening of the peso against the dollar,” she mentioned.

“On external front, there is also the threat in terms of the normalization of the economies of developed nations, and therefore the fear that there will be an outflow of funds from emerging markets back to the developed countries. And also, of course, some of the discussions in terms of more protectionism,” she added.

On the other hand, PwC Philippines Chairman and Senior Partner Alex Cabrera noted that some firms are on the wait-and-see mode because of the uncertainties brought by the tax reform program, as well as the political noise.

“Apparently some investors are being spooked by the uncertainty that’s happening, not only in the taxes and incentives that will be going down or will be substantially reduced in the TRAIN 2 (Tax Reform for Acceleration and Inclusion Package 2), but also the uncertainty of whether the constitution will be railroaded and whether the rule of law is really possible to stay alive in this kind of political environment,” Cabrera said.

He mentioned that there were two companies asking for PwC’s advice concerning an exit strategy from the Philippines.

He added that these companies are in the BPO sector and are locators of the Philippine Economic Zone Authority.

“They expressed concerns and some of their investments are being halted,” said Cabrera. (PNA)