Trade war, oil to challenge exports

    Diversification. Electronics and semiconductor products, the Philippines’ top export, are moving up the value chain by moving away from pure assembly. (Reuters file photo)
    At a semiconductor factory. (Reuters file photo)

    The Philippines is poised to become an increasingly attractive investment destination for years to come, according to a new report by the global research and consultancy firm Oxford Business Group (OBG),

    The Report: The Philippines 2019, a product of 12 months of field research, however, said exports may  continue to have a challenging year due to the trade war and rising oil prices.

    The Philippines’ cooling inflation, improved ease of doing business and increased openness to foreign participation are set to encourage more foreign direct investment and boost prospects of the Philippine economy over the medium to long term, OBG said.

    “2019 and 2020 will see the accelerated rollout of public investment to stimulate economic growth.

    While much of the 2019 budget has been earmarked for infrastructure projects, the longer-term benefits to the economy will also begin to make themselves felt in the years ahead, boosting competitiveness, productivity and efficiency,” the report added.

    It noted public investments are seen  creating a number of opportunities for public-private partnerships on multiple large-scale projects.

    OBG also said more opportunities for foreign players are expected with  the liberalization of the Foreign Negative Investment List and the Ease of Doing Business law.

    The report noted potential areas of concern notably  the deepening of trade tensions between the US and China., coupled with higher oil prices stemming from supply uncertainties and production cuts from the Organization of the Petroleum Exporting Countries.

    While these developments will challenge the exports sector, OBG believes these would also provide further impetus for Philippine industries to diversify markets and increase their value added

    “At the halfway point of the Duterte presidency, progress has been made in improving infrastructure and delivering reforms that promote inclusive growth. With support strengthened in Congress, the adminstration has the opportunity to push through further fiscal and structural reforms that can generate greater public revenues, reduce obstacles to foreign investment and tackle some of the major impediments to long-term, sustainable development, said Patrick Cooke, OBG regional editor for Asia.