The high record of the Philippine economy at the end of 2016 has not quite changed the low confidence index clocked around the same period. To make some sense of the situation as well as draw a clearer picture of 2017, the Philippine Tatler invited George Barcelon, president of the Philippine Chamber of Commerce and Industry (PCCI); Hans Sicat, president and CEO of the Philippine Stock Exchange; Doris Magsaysay Ho, president and CEO of Magsaysay Group of Companies; Donnie Tantoco, president of Rustan Commercial Corporation; and Aftab Ahmed, CEO of Citi Philippines. Here is the interesting conversation that transpired, as moderated by top broadcast journalist, Karen Davila.
KAREN DAVILA: We’re closing the year with essentially good numbers at 7.1 per cent growth and despite what’s in the news, the concerns of Western media, many say that no one can stop the growth in the region. In this context, how would you describe 2017?
GEORGE BARCELON: With our economic fundamentals, and the fact that there’s a lot of PPPs [public-private partnerships], growth will definitely be there. The manufacturing sector is gearing up; the government is focusing on the agriculture sector. If done well, these could easily move up our growth by a percentage or so. Budget Secretary Ben Diokno has said he expects growth to be at 10 per cent by the end of President Duterte’s term. With what we see on the plate now, 8 per cent is definitely achievable. Add tourism, and we can see even a higher growth.
KD: So you believe this administration is on the right track so far?
AFTAB AHMED: I’m very optimistic about the growth opportunities and prospects. The focus on policy actions highlights that all the economic policy actions to date have been positive and this contributes to enhanced optimism. The GDP growth, projected to be anywhere between 6.8 to 7.1 per cent, makes the Philippines the second fastest growing economy in Asia. The Philippines has had 71 quarters of continuous growth. Very few economies anywhere in the world have achieved 17 years and nine months of continuous growth!
DORIS HO: We have a great opportunity to build on the government’s socio-economic agenda with a clear strategy on which sectors of agriculture, manufacturing, and services give us a unique competitive advantage. Since the government is pushing for growth throughout the country, the strategy should identify regional production clusters around hub ports so we have economies of scale to lower cost of power, logistics, and transport as well as offer SMEs [small and medium-sized enterprises] the opportunity to be part of supply chains. We compete with economies that have clear export targets—Peruvian avocado, New Zealand dairy, Australian lamb chops. An aggressive and focused strategy embraced by business, government, civil society, and the labour force, I feel, would be the greatest contributor to sustainable growth.
AA: In terms of inclusion, the importance of agriculture is that even though it only accounts for 10 per cent of GDP, it involves about 30 per cent of the workforce.
KD: What would be the practical way to improve the numbers of agriculture? The sector was at a negative growth in the past administration, wasn’t it?
GB: The failure of agriculture, I think, lies on the fact that we don’t have proper crop insurance. The farmers go broke every time the weather destroys their crops. We need to put a system in place where banks can give loans to the farmers because they’re insured. And here we don’t have corporate farming because of the land reform issue. So that’s another area that I think this administration has to really look at. I’ve heard people in the agri sector saying that going into rice may not be so good. Rice is dependent on a lot of fresh water, and rainfall here is unreliable. Plus we don’t have natural waterways. I would rather we look at high-value crops to compete with the others.
AA: It goes back to the basics like seed nancing, fertiliser nancing, mechanisation, as well as introducing modern technology. IBM has a programme, developed in the Philippines, that tells farmers what time of year to plant and when to harvest for improved crop production.
DH: More serious effort must go into building the capacity of the cooperative to build the economies of scale needed while helping farmers have a larger share of income.
KD: As a big retailer in the country, what is your biggest challenge on a day-to-day level?
DONNIE TANTOCO: The biggest issue affecting us on a day-to-day level is road traffic. Customers are planning their lives and schedules based on traf c that is causing our customers to be much more time-poor. It’s really a huge energy drain, even for our employees. So when customers do visit, we must provide the best service, speed of payment, right product, and also a great experience. After all, it cost them a lot in terms of time and energy due to the traffic to make it to our stores.
HANS SICAT: Regarding challenges to business, I would say clarity [in the anti- contractualisation policy] is perhaps lacking. Conceptually, I think we know what the objective is, but how you get to that objective and how you operationalise it is another thing. Clearly, some industries, not necessarily just some companies, will be affected, depending on how contractualisation is defined.
GB: PCCI signed an MOU [Memorandum of Understanding] with the Bank of China, primarily to address the issue of the SMEs. Because China grew through SMEs, it is willing to foot the bill for a series of forums which will share the best practices they have experienced in this field. What we would like is to have more reasonable rates for the micros so we’re trying to help bridge the gap between the banking sector and the SMEs to come up with something agreeable.
DH: Growth of MSMEs will provide the most powerful socio-economic impact so we must all support the work being done by the DTI [Department of Trade & Industry] and GoNegosyo. E-commerce is giving MSMEs the most powerful platform to access markets, so building the capacity of entrepreneurs [especially women working from home], to sell goods and services domestically and across borders is key. Businesses like Alibaba are offering nancing over the internet [FinTech] assessing risk from historical data on the track record of the seller and buyer, disrupting traditional banking practices.
AA: The 10-point socio-economic agenda starts with talking about the continuation of macroeconomic policies, including fiscal and monetary, all of which have contributed in delivering a strong macro scorecard. Points 2, 3, and 4 talk about tax reform, increasing competitiveness and ease of doing business, and growing infrastructure spending to about 5 per cent of GDP. The agenda also focuses on investing in human capital development and on promoting science and technology. Each of the 10 points will have a very positive impact on the economy and will help the GDP growth objective become a reality.
GB: The 10-point plan sort of follows the PCCI advocacy, expressed in two words: GIANT STEPS. G stands for good governance; I for infrastructure; A, agriculture; N, new era of manufacturing; T, tourism. The enabler STEPS: S is for science; T, technology; E, education; P, people skills; S, source of financing or SME financing.
KD: Why isn’t the market re ecting the effects of the 10-point agenda right now? Some people actually fear that the market isn’t at its best, and some blame this on President Duterte.
Read the rest of this article in the January 2017 edition of Philippine Tatler. Available in all leading newsstands and bookstores. Download it on your digital device via Zinio, Magzter, and Pressreader
Photography by Dookie Ducay | Location at Sage at Makati Shangri-La