THE PHILIPPINES

JAMES M. McCARTHY

COUNTRY OUTLOOK:

Commercial CounselorU.S. Commercial ServiceManila, Philippines

• 7,107 islands – size of New England

• 100 million people (12th

largest in world)

• Over 12 million Overseas Filipino Workers (OFWs)

• Religion: Catholic (85%), Protestant and Muslim

GEOGRAPHY AND PEOPLE

• COLONIAL ERA 1898 to 1946

• WORLD WAR 2 Shoulder to Shoulder

• MATURED FRIENDSHIP English Language Democratic Principles 5 million Phil-Ams in the U.S. Estimated 400,000 U.S. citizens resident

in the Philippines

U.S. – PHILIPPINE BILATERAL RELATIONS

• The U.S. is the second largest trading partner

• High opinion of the U.S.

• Well-established market for U.S. business

• American brands are well-known and trusted

• Strong affinity for Western culture

• Fourth largest English-speaking country in the world

• Young population: Filipino people are eager consumers and early adapters of new trends and technologies

THE PHILIPPINE MARKET

• Reform-minded Administration with a growing track record of good governance, prudent fiscal and budgetary management

• Strong external payments position supported by large foreign exchange reserves, robust overseas foreign remittances

• Credit rating upgrades over the past two years and ongoing market appetite

• Major industries: business process outsourcing, electronics assembly, agribusiness, tourism

• Politically stable: next election in May 2016.

THE PHILIPPINES: Pushing Forward on all Fronts

Priorities:

• Rapid, inclusive, and sustained economic growth

• Anti-corruption/transparent, accountable and participatory governance

• Poverty reduction and empowerment of the poor and vulnerable

• Public-Private-Partnership (PPP)

“By curbing corruption we can reduce poverty.”-President Benigno S. Aquino III, Feb. 21, 2012

President Benigno S. Aquino III15th President of the Philippines

THE AQUINO ADMINISTRATION

• Over US$18B two-way trade - relatively balanced trade flows (deficit of $1.7 billion)

• 33rd largest market for U.S. exports

• The U.S. is 2nd largest foreign investor in the Philippines (largest FDI in 2014)

• U.S. foreign direct investment (FDI) in the Philippines (stock) at $4.4 billion

U.S. – PHILIPPINE TRADE RELATIONS

• 6.0%-6.5% expected growth rate in 2015(one of the highest in Asia)

• Limits: Infrastructure issues, naturaldisasters

• Strong peso• Managed inflation• Economy driven by:

• Remittances by 10 million overseasFilipinos -US$20 billion of remittances(about 10% of the GDP)

• Service Sector (BPOs)• Consumption

THE OVERALL PICTURE…

WEF Global Competitiveness Report (2014)

52/144 +23*

IFC Ease of Doing Business Report (2014)

95/189 +39*

TI Corruption Perceptions Index (2014)

85/175 +44*

PHILIPPINES: A WORK IN PROGRESS

* - Since 2011

• Bureaucracy

• Lack of transparency

• Lack of expertise

• Legacy of corruption

• Strain on infrastructure/energy shortfalls

• Local Government Units – rules and requirements

• Judicial system: appeals process, “legacy cases”

• Limited foreign ownership : 60/40 rule

CHALLENGES IN DOING BUSINESS

1. Infrastructure – Airports, Ports, Railroads, etc.

2. Energy (Smart Grid, Renewables)

3. Information Technology

4. Healthcare and Medical Equipment/Services

5. Defense and Security

6. Franchising

7. Water/Environment

LEADING INDUSTRIAL SECTORS FOR U.S. EXPORTS

TO THE PHILIPPINES (2015)

• Secretary’s Infrastructure Roundtable

• Primary Markets: the Philippines/ASEAN, India, Mexico

• TDA Feasibility Studies – Airports, Smart Grid

• Database of Projects

• MEMORANDUM OF COOPERATION

• Webinar on May 7

• U.S.-ASEAN Business Council Programs

• Key: Awareness

INFRASTRUCTURE INITIATIVE

• Visits by President Obama, Secretary Kerry

• Visit by Secretary of Commerce Penny Pritzker – first in almost 20 years

MILESTONES – PAST AND FUTURE

• Themes: Fostering SMEs Role in Regional and Global Markets, RegionalIntegration, Disaster Resiliency, Human Capital

• Senior Officials Meetings

• Ministerial Meetings (Trade, Finance, e.g.)

• Working Groups

• Department of Commerce Lead on SMEs

• November:

• APEC Ministerial Meeting: November 15-16

• APEC CEO Summit: November 15-17

• APEC Economic Leaders Meeting: November 17-18

THE PHILIPPINES: HOST FOR APEC 2015

• The Philippines has much to offer to American business….

• A Strong Comeback with Economic Opportunities in Many Hot Sectors

• Warm, Friendly People… and English-Speaking

• Shared Cultural Heritage in a vibrant democracy

WHY IT’S MORE FUN THE PHILIPPINES?

What you should know (before you go)

• Local presence required

• Do your due diligence – Know Your Partner!

• Patience (and determination) a virtue, necessity

THANK YOU!

James McCarthyCommercial Counselor

U.S. Commercial Service Philippineswww.export.gov/philippines

James.McCarthy@trade.gov

Phone: +632-301-2000