Fostering Competitiveness of the Philippines to attract Foreign Direct Investments from the US

US and Philippines:
Foreign Direct Investments

Team 9 Consultants Inc.

Topnotch Global Talent



Fostering Competitiveness of the Philippines to
Attract Foreign Direct Investments



Outline of Business Report Presentation
1.0 Overview of post-ﬁnancial crisis economy
!

2.0 Philippine introduction
!

3.0 Competitiveness and Growth
!

4.0 Foreign Direct Investment Trends
!

5.0 Hurdles for the Philippines
!

6.0 Public Policy and Government Action Recommendations
!

7.0 Conclusion



2008 Financial Crisis



1.0 Overview of the post-ﬁnancial crisis economy
2.8M people lost jobs
!

Banks closed. Companies froze.
!

U.S. slowed down -8.3% GDP decline
!

Europe was in crisis
!

Asian Market Decline
!



SHIFT OF
MOMENTUM FROM
WEST TO EAST



Foreign Direct Investment in the United States and U.S. Direct Investment
Abroad, Annual Inﬂows and Outﬂows, 1990-2011 (in billions of dollars)



Ripples of ﬁnancial crisis seemed to have missed
the Philippines



2.0 Philippines
Growth in GDP



Real Estate Boom Fuelled by Low Lending Rates

source: http://brycggroup.com/category/bgperspectives/



Deepening Capital Markets

http://quotes.wsj.com/PH/XPHS/PSEI/index-interactive-chart



Good Governance = Good Economics



Growing Tourism Industry



In our analysis, we focused on the potential growth of
certain sectors in the Philippines by understanding the
measures and factors that have been critical for
building certain competitive edges.



4.0 Trends of Foreign Direct Investments



Convenience of Doing Business

Starting a business
Dealing with
construction
permits
Getting electricity
Registering
property
Getting Credit
Protecting
Investors
Paying taxes
Trading Across
Borders
Enforcing
Contracts
Resolving
insolvency

175

170

16

88
121

99
33

43
21

101
86

121
86

35
1

52
137

128
131

4
36

54

42

5

147

114

30

144

100

42



Labor and Employment



Literacy Rate

96.7%

93.5%

93.1%



Infrastructure

Infrastructure

Rank (out of 148)

Score(1-7)

Philippines

96

3.4

Malaysia

29

5.2

Indonesia

61

4.2



Tax and Ownership Structure

Infrastructure

Rank (out of 148)

Philippines

86

Malaysia

14

Indonesia

61



Growing Consumption

Philippines has a relatively high percentage of
private consumption in terms of contribution
to GDP (12%).



Non-economic Factors
Country

Economic Impact
People Killed (per
(per highest impact common disaster)
disaster)

People Affected (per
common disaster)

$29 million

123

477,641

$34 million

6

17,614

$11.3 million

2,360

111,101



4.0 Hurdles for the Philippine Government



(1) High levels of corruption, strict labor
laws, and bureaucracy in business approvals

35 days

6 days

48 days




(2) Insufﬁcient Investment In Infrastructure

Land

Telecommunications

Electricity




(3) High Tax Rates

46.6%

24.5%

34.5%




(4) Non-economic Factor
Need for a sustainable supply chain
and logistics during natural disasters



5.0 Public Policy and Government Action
Recommendation



Recommendation
(1) Higher Investment in Education and Proper
Implementation of K-12 Curriculum



Recommendation

(2) Proper Execution of Imposed Prudent Measures
and Risk Management Practices by the Central Bank



Recommendation
(3) Restructure Tax Rates



Recommendation
(4) Push for Transparency and Accountability



Recommendation
(5) Continue Additional Spending on Infrastructure and R&D



Recommendation
(6) Tilt the Playing Field through Incentives



Recommendation
(1) Higher Investment in Education and Proper
Implementation of K-12 Curriculum

(2) Proper Execution of Imposed Prudent Measures
and Risk Management Practices by the Central Bank

(3) Restructure Tax Rates
(4) Push for Transparency and Accountability
(5) Continue Additional Spending on Infrastructure and R&D
(6) Tilt the Playing Field through Incentives



6.0 Conclusion

The Philippines, given its current momentum and
position in the global economy, can be more competitive
by pushing for proper public policy changes, structural
actions and smooth execution.

Fostering Competitiveness of the Philippines to attract Foreign Direct Investments from the US

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