The Philippines needs a “cheerleader” for its economy.
The country faces stiff competition from its Asean neighbors, particularly Vietnam and Indonesia, for investments it will need to build infrastructure, develop new industries and reap the benefits from technology transfer.
From 2013-2017, the Philippines, Indonesia and Vietnam recorded $185 billion in net FDI inflows. At $33 billion, the Philippines had the smallest share of the pie. But a closer look reveals that more than half of that was invested in 2016 and 2017.
If the numbers are anything to go by, it’s clear that President Duterte started off on the right foot with foreign investors.
The ambitious $180-billion “Build, build, build” infrastructure program, talks to ease foreign ownership restrictions and TRAIN-1 highlighted that the Philippines was open for business—that it was going to drive infrastructure development and would no longer remain a bystander vis-à-vis the local private sector.
However, fast forward to today: Just as Asean economies are facing a raft of global uncertainties, the difficulties of staying on message for the Philippines is becoming more apparent.
For instance, greater attention should have been given to the recently expanded Mactan-Cebu International Airport, dubbed the “world’s first resort airport.” Today, its wooden ceilings and its Mother-of-Pearl-embedded granite floors are a welcome contrast to Manila’s dreary Ninoy Aquino International Airport. This fact should have been highlighted as proof that “Build, build, build” is well underway.
Instead, however, pundits are arguing over whether the economy is in the doldrums or not. This should be a time not for hand-wringing, but for confidence and a forward-thinking mindset.
The Philippines is in greater shape than most people give it credit for. In April this year, S&P upgraded the Philippines’ credit rating outlook to “positive.” Its current “BBB” rating is already investment grade and higher than both Indonesia and Vietnam.
This isn’t to say that there aren’t challenges. A looming US-China trade war, disruptions in the supply of Iranian oil and rising interest rates in the United States are weighing on investor sentiment. Foreign investors are in a risk-off mode, taking a wait-and-see approach and seeking safe havens outside Asean.
The good news is that global private equity “dry powder”—money raised but not yet invested—has breached a record $1 trillion. There’s money waiting to be invested at the right opportunity.
A recent investor conference in London hosted by Asean banking giant Maybank has even reaffirmed that, despite global headwinds, Southeast Asian economies are expected to remain resilient.
What the Philippines needs now is a coherent message for the global investment community. Indeed, its Asean neighbors have never shied away from doing this.
Vietnam’s prime minister, Nguyen Xuan Phuc, invariably peppers his foreign press interviews with plugs for the country’s multibillion-dollar privatization plan. Every new expansion by Samsung—the largest foreign investor in Vietnam—is flashed to local and foreign stakeholders as proof of confidence in the country’s economy.
In Indonesia, as President Joko Widodo heads into the 2019 presidential election, his 10 million Instagram followers are constantly reminded of the $6.6 billion worth of infrastructure projects completed under his tenure thus far.
The Philippines must emulate these moves. It needs a cheerleader, if you will, to lead the country’s charm offensive. A leader who can communicate the country’s economic reforms and the opportunities on its shores to the world, including the international press and fora.
In the ruthless global competition for investment and influence, it is not enough to just do and say the right things. A country must also be seen and spoken of as such.
Now is the time for confidence—and action—on the part of the Philippines.
Gerald Tan is head of business advisory of the KRA Group, a Southeast Asia-wide public affairs and political risk consultancy.