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Economy of the philippines and it's neighbors
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Economy of the philippines and it's neighbors

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  • ABSTRACTDuring the past several decades the Philippines economy as well as their neighbors; Malaysia and Indonesia, have experienced many ups and downs. It’s richness in natural resources however has not helped this area much to live up to it’s potential. After many struggles they have been showing much improvement especially in Malaysia. These three countries currently have some competition in their tourism and service industry and also so good strengths in the agriculture and manufacturing industry as well.
  • INTRODUCTIONIn this presentation we will discuss the economy of the Philippines and two of it’s neighboring countries: Malaysia and Indonesia, as well as the economic sectors in which each are strong in and how they may or may not complement one another. As this map shows, these three Asian countries are immediate neighbors.
  • ECONOMY OF THE PHILIPPINES The Philippines which is currently facing massive foreign debts had showed a promising economy during the early years. during the 1950’s it was a prospective prime candidate to lead Asia, however for many reasons, the Philippine government failed to live up to its potential.The economic position of the Philippines has been challenged by three main factors; reducing budget deficit, improving competitiveness and trade liberalization. The country’s deficit problem is due inpart to the high association of it’s current tax collection and administration which are weak as well as a high corruption level and with poor judgment in choosing priorities, there is little left over for social development or investment infrastructure. (Background Note: Philippines, 2012) Currently, there is a growing economic divide between Philippines and its neighboring countries due to improved competitiveness. In trade liberalization, the FTA may threaten the Philippine least competitive industries.Due to unwanted political influences and internal conflicts, the archipelago experienced a sluggish economic growth and there was also sluggishness in building or strengthening its infrastructure.The Asian economic crisis also affected the country along with other Asian countries which caused a large decline in the value of the Philippine peso as well as falls in the stock market. However the country strived to overcome all the crisis and challenges.Despite all difficulties the Philippines is struggling hard and showing some economic progress. The country was ranked as the 45th largest economy in 2010. It is the fastest-growing economy in Southeast Asia and has been compared to the economy of India in its sudden and rapid growth. Philippines which has a capitalist market economy is currently tagged as a "newly industrialized country". (Philippines: Economy)
  • Economy of the Philippines (2012) With plenty of resources and help of foreign workers remittances and foreign investments, the Philippine economy showed progressive growth. The Services sector mainly on tourism had the largest growth so far at 55.1%, with inflation at 3.8%. (World Factbook: Philippines, 2011)There has also been progress in Exports which are mainly; electronic equipment, machinery, transport equipment, garments, coconut products, and chemicals. Some of the main export partners include the US , Japan ,Hong Kong, Netherlands, Taiwan, Malaysia, Singapore and China. (World Factbook: Philippines, 2011) Imports had also been progressive with commodities such as raw materials, machinery, equipment, fuels, and chemicals. Main imports partners include Japan, US, Singapore, South Korea, Taiwan, China, and Hong Kong. (World Factbook: Philippines, 2011) The current President Gloria Macapagal Arroyo envisioned to keep a steady progressive economic growth by all means and strategies pledging to make the Philippines a developed country by the year 2020. (Background Note: Philippines, 2012) 
  • PHILIPPINE ECONOMIC STRENGTHSAgriculture has been the largest economic strength of the Philippines. Some of the various agricultural products include; rice, coconuts, corn, sugarcane, bananas, pineapples, mangoes, pork, eggs, beef, fish. Wide rice fields and wide agricultural plantations are highly productive. With the country relying highly on agriculture, farmers are being called “ the backbone of the country.” (Philippines: Uniquely Rising from Its Past)The country also has a progressive industrial sector mainly based on manufacturing electronics and other high-tech components, usually from American corporations.Mining of various minerals including gold, silver, and coal to name a few, has also been providing great contribution to the Philippine economy.With the remittances of foreign workers bolstering the country's economy for over more than a decade, overseas foreign workers dollars has been greatly helping the country's ailing economy. The overseas foreign workers are in fact highly regarded by the government and been called the "living heroes". (Philippines: Uniquely Rising from Its Past)Services mainly on tourism have also been providing great economic contribution. The country's richness in natural beauties had is highly attractive and becoming one of the top tourist destinations. Do to security threats recently there has been a decline in influx of foreign tourist which has caused some decline in income from tourism. However though, tourism has brought a great economic contribution to the economy. (Philippines: Economy)Much of the industrial sector is based around manufacturing electronics and other high-tech components, usually from American corporations. Industrial production is centered on processing and assembly operations of the following: food, beverages, its production yield to meet domestic demands. (Philippines: Economy)
  • ECONOMY OF MALAYSIAMalaysia, a neighbour of the Philippines, was once a middle-income country but has been the center of trade in Asia for centuries now. The country transformed itself on the 70's to 90's from a producer of raw materials into an emerging multi-sector economy. This led to a progressive economic growth of the country.(World Factbook: Malaysia, 2012) The country’s economy also faced ups and downs. Regardless of cause and effect claims, rejuvenation of the economy coincided with massive government spending and budget deficits in the years that followed the crisis. Malaysia has enjoyed a faster economic recovery compared to its neighbours. The pace of development is not rapid but is seen to be more sustainable. (World Factbook: Malaysia, 2012)The country today is considered a "newly industrialized country". Its growth was almost exclusively driven by exports, particularly with electronics. (World Factbook: Malaysia, 2012)
  • ECONOMY OF MALAYSIA (2012) Since coming to office in 2003, Prime Minister Abdullah has tried to move the economy farther up the value-added production chain by attracting investments in high technology industries, medical technology, and pharmaceuticals. The Government is continuing efforts to boost domestic demand in order to wean the economy off its dependence on exports. Nevertheless exports , particularly electronics , remain a significant driving force for the economy. As an oil and gas exporter, they have profited from higher world energy prices, although the rising cost of domestic gasoline and diesel fuel forced Kuala Lumpur to reduce government subsidies. Malaysia "unpegged" the ringgit from the US dollar in 2005 and the currency appreciated 6% per year against the dollar in 2006-07. (World Factbook: Malaysia, 2012)
  • MALAYSIA ECONOMIC STRENGTHSServices which is mainly relying on tourism, is the country's greatest economic strength. The country has been the top destination of tourists in Asia.  Industries of the country include rubber , oil palm processing and manufacturing, light manufacturing industry, electronics, tin mining and smelting, logging and processing timber, petroleum production, and agriculture processing,  Agriculture include rubber, palm oil, cocoa, rice, timber, coconuts, and pepper. (World Factbook: Malaysia, 2012)
  • ECONOMY OF INDONESIAIndonesia, a neitherneighbourof the Philippines has been undergoing significant economic reforms under President Yudhoyono. (World Factbook: Indonesia, 2012) Its debt-to-GDP ratio has been declining steadily. But with economic struggles, its foreign exchange reserves are at an all-time high of over $90 billion, and its stock market has been one of the three best performers in the world in 2006 and 2007. (World Factbook: Indonesia, 2012) Global investors has been helping Indonesia by seeking out higher returns in emerging markets. The government has been striving hard to improve strategies by introduceing significant reforms in the financial sector including tax and customs reforms, the introduction of Treasury bills, improved capital market supervision, and a new investment law addressing some of the concerns of foreign and domestic investors. (World Factbook: Malaysia, 2012) Indonesia has been and is still struggling with poverty and unemployment, inadequate infrastructure, corruption, a complex regulatory environment, and unequal resource distribution among regions. The consecutive major disasters the country suffered from also had great impact on their economy. The disasters are hampering the economic progress of the country. (World Factbook: Indonesia, 2012)
  • ECONOMY OF INDONESIA (2012) Foreign investors helped the country show some improvement of their economy and have been showing progressive economic growth. (World Factbook: Indonesia, 2012)  Major disasters including man-made as well as natural disasters have greatly affected the country’s economic growth. Also security threats and internal conflicts have had great effects on the country. As the country is located on the Pacific "Ring of Fire" Indonesia remains vulnerable to volcanic and tectonic disasters. The major disaster it suffered along with the foreseeable disasters in the future, are all hampering the economic progress of the country. (World Factbook: Indonesia, 2012)
  • INDONESIA ECONOMIC STRENGTHSThe services sector of Indonesia is the economy's second largest sector. The influx of tourism has helped in contributing to the country's economy. The security threats and the recent major disasters have had negative impacts on its tourism and the country is striving to overcome these threats. (World Factbook: Indonesia, 2012)  Agriculture employs the second highest workers with the services sector employing the largest amount of workers. (World Factbook: Indonesia, 2012) The major industries include petroleum and natural gas, textiles, apparel, and mining. Major agricultural products include palm oil, rice, tea, coffee, spices, and rubber. (World Factbook: Indonesia, 2012)Indonesia being the only member of OPEC in Southeast Asia has greatly contributed to the high economic growth rates of the country. Foreign investment which flows into the country has also helped in its rapidly developing export-oriented manufacturing sector. (World Factbook: Indonesia, 2012)
  • IMPACTS OF ECONOMIC STRENGTHSThe three mentioned countries have similarities in economic strengths. The three are competing with the tourism industries. The agricultural sector are their strengths, but with differences in main products. There are no obvious competition within the agricultural and industrial sectors as the specific products and partners in exports and imports are different. The three countries have been recovering from Asian economic crisis and confronting the threat of terrorism. Malaysia has gone far in development. Meanwhile the three Asian countries have been behind China. While China is leaping ahead other Asian nations are lagging behind. But Malaysia and Indonesia are pulling up from the pack. IMD World competitiveness scale ranks the Philippines behind Asian countries outdistanced by Vietnam and just a bit ahead of Indonesia. Other Asian countries also lost FDI in the last few years due to increasing competitiveness of China. Currently Malaysia and Indonesia are expected to grow slower than the Philippines.
  • INVESTING IN THE PHILIPPINES: MANAGEMENT ISSUESThe Philippines have been showing an economic progress, however, the progress it is showing and its economic situation remains unstable. The Philippine peso has been stable for a while but deflation rate is always unpredictable especially with progressive increase of oil prices worldwide. Corruption is another issue that is very obvious and remain unresolved within the archipelago which can have great impact among the foreign investors.The internal conflicts plus involvement of international extremists has been playing a role in economic progress of the country. The safety and security issues is then one of the great issues investors may have to face. Disasters especially typhoons and flooding are very common issue in the country. And the internal conflicts and wars have been adding to the disasters which are great threats to the economic progress. Foreign investors are not being exempted from this.
  • INVESTING IN THE PHILIPPINES: MANAGEMENT ISSUES Non-compliance of important factors by the competitor, authorities, and the workers would be a challenge for any foreign investors which needs effective strategies to keep a well controlled management.  This includes the wage laws. Wages in the Philippines include inequalities for the time being and the right taxes is another issue that could be unjustified and unlawful depending on who and what circumstances are involved. The health and safety requirements are another important issue that has to be looked upon. The working hours is another issue that needs proper management. Under time and overtime needs to be closely and strictly followed up by any investors. Tricks and fraud involvement are always inevitable thus this must be strictly looked upon.

Transcript

  • 1. ECONOMY OF THEPHILIPPINES AND ITSNEIGHBORS:MALAYSIA ANDINDONESIA Victoria Rock MGMT220-1201A-04 Prof. Ryan Repich January 21, 2012
  • 2. ABSTRACT
  • 3. INTRODUCTION
  • 4. Economy of the PhilippinesA candidate to lead AsiaEconomic position challenged.Sluggish economic growth.Affected be Asia economic crisisCapitalist market economy in AsiaNewly industrialized country
  • 5. Economy of the Philippines (2012)GDP: $351.4 billion Inflation: 3.8%GDP growth: 7.3% Exports: $50.68 billionGDP per capita: $3,500 Import: $61.07billionGPD by sector Public debt: 52.4% of Agriculture: 12.3% GDP Industry: 32.6% Services: 55.1%
  • 6. Philippine Economic StrengthsLarge agriculture sector Business processManufacturing outsourcingMining Industrial SectorForeign Workers Manufacturing electronics Remittance High-tech componentsServices- Tourism Foods and beverages
  • 7. Economy of MalaysiaCentre of trade for centuries.Affected by Asian crisis.Emerged as multi- sector economy.Rapid economic boom
  • 8. Economy of Malaysia (2012) GDP : $414.4 billion  Inflation : 1.7% GDP real growth rate:  Public Debt : 53.1% of 7.2% GDP GDP per capita : $14,700 GDP by sector  agriculture: 10.5%  industry: 41.4%  services: 48.2%
  • 9. Malaysia Economic StrengthsServices : 48.2%Industry : 41.4%Agriculture : 10.5%  Rubber  Palm oil  Cocoa  Rice  Timber
  • 10. Economy of Indonesia On significant economic reforms. Declining debt-to-GDP ratio. One of the three best stock market performers in the world. Suffered major disasters. Affected by Asian economic crisis.
  • 11. Economy of Indonesia (2012) GDP : $1.03 trillion GDP by sector GDP real growth rate :  agriculture: 15.3% 6.1%  industry: 47% GDP per capita : $4,200  services: 37.6% Inflation : 5.1% Public Debt : 25.7% of GDP
  • 12. Indonesia Economic Strengths Services  Agriculture Industry  Palm oil  petroleum and  Rice natural gas  Tea  Textiles  Coffee  Apparel  Spices  Mining  Rubber
  • 13. Impacts of Economic StrengthsSimilarities in Economic strengths.Tourism competitionAll three are behind China.Indonesia and Malaysia slower this year.
  • 14. Investing in the Philippines: Management IssuesEconomic InstabilityGraft and CorruptionSafety threatsDisasters  Natural  Man-made
  • 15. Investing in the Philippines: Management IssuesNon-compliance of relevant business factors:  minimum wage laws  payment of right taxes  health and safety requirements  working hours
  • 16. ConclusionMost Asian countries including Philippines, Malaysia and Indonesia have suffered, and perhaps will be suffering from economic crisis, but these countries have been exerting all their best efforts to get up from the pack. Malaysia has advanced much ahead in is economic conditions while the Philippines and Indonesia are still struggling to improve their economic situation. So far there has been good signs of improvements, despite the different challenges faced.
  • 17. ReferencesBackground Note: Philippines. (2012, January 17). Retrieved from U.S. Department of State: http://www.state.gov/r/pa/ei/bgn/2794.htm#econPhilippines: Economy. (n.d.). Retrieved from Wikipedia; The free encyclopedia: http://en.wikipedia.org/wiki/PhilippinesPhilippines: Uniquely Rising from Its Past. (n.d.). Retrieved from Thomas White: Global Investing: http://www.thomaswhite.com/explore-the- world/philippines.aspxWorld Factbook: Indonesia. (2012, January 3). Retrieved from Central Intelligence Agency: https://www.cia.gov/library/publications/the-world- factbook/geos/id.htmlWorld Factbook: Malaysia. (2012, January 3). Retrieved from Central Intelligence Agency: https://www.cia.gov/library/publications/the-world- factbook/geos/my.htmlWorld Factbook: Philippines. (2011, December 20). Retrieved from Central Intelligence Agency: https://www.cia.gov/library/publications/the-world- factbook/geos/rp.html