COUNTRY OUTLOOK: THE PHILIPPINES. JAMES M. McCARTHY Commercial Counselor U.S. Commercial Service Manila, Philippines

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1 COUNTRY OUTLOOK: THE PHILIPPINES JAMES M. McCARTHY Commercial Counselor U.S. Commercial Service Manila, Philippines

2 GEOGRAPHY AND PEOPLE 7,107 islands size of New England 100 million people (12 th largest in world) Over 12 million Overseas Filipino Workers (OFWs) Religion: Catholic (85%), Protestant and Muslim

English Language Democratic Principles 5 million Phil-Ams in

3 U.S. PHILIPPINE BILATERAL RELATIONS 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

4 THE PHILIPPINE MARKET 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

5 THE PHILIPPINES: Pushing Forward on all Fronts 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.

6 THE AQUINO ADMINISTRATION By curbing corruption we can reduce poverty. -President Benigno S. Aquino III, Feb. 21, 2012 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) President Benigno S. Aquino III 15 th President of the Philippines

U.S. PHILIPPINE TRADE RELATIONS Over US$18B two-way trade - relatively balanced trade flows (deficit of $1.7 billion) 33 rd largest market for U.S. exports The U.

7 U.S. PHILIPPINE TRADE RELATIONS Over US$18B two-way trade - relatively balanced trade flows (deficit of $1.7 billion) 33 rd largest market for U.S. exports The U.S. is 2 nd largest foreign investor in the Philippines (largest FDI in 2014) U.S. foreign direct investment (FDI) in the Philippines (stock) at $4.4 billion

8 THE OVERALL PICTURE 6.0%-6.5% expected growth rate in 2015 (one of the highest in Asia) Limits: Infrastructure issues, natural disasters Strong peso Managed inflation Economy driven by: Remittances by 10 million overseas Filipinos -US$20 billion of remittances (about 10% of the GDP) Service Sector (BPOs) Consumption

9 PHILIPPINES: A WORK IN PROGRESS WEF Global Competitiveness Report (2014) IFC Ease of Doing Business Report (2014) 52/ * 95/ * TI Corruption Perceptions Index (2014) 85/ * * - Since 2011

10 CHALLENGES IN DOING BUSINESS 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

11 LEADING INDUSTRIAL SECTORS FOR U.S. EXPORTS TO THE PHILIPPINES (2015) 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

12 INFRASTRUCTURE INITIATIVE 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

13 MILESTONES PAST AND FUTURE Visits by President Obama, Secretary Kerry Visit by Secretary of Commerce Penny Pritzker first in almost 20 years

THE PHILIPPINES: HOST FOR APEC 2015 Themes: Fostering SMEs Role in Regional and Global Markets, Regional Integration, Disaster Resiliency, Human Capital Senior Officials Meetings Ministerial Meetings

14 THE PHILIPPINES: HOST FOR APEC 2015 Themes: Fostering SMEs Role in Regional and Global Markets, Regional Integration, 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 APEC CEO Summit: November APEC Economic Leaders Meeting: November 17-18

15 WHY IT S MORE FUN THE PHILIPPINES? 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

16 What you should know (before you go) Local presence required Do your due diligence Know Your Partner! Patience (and determination) a virtue, necessity

17 THANK YOU! James McCarthy Commercial Counselor U.S. Commercial Service Philippines Phone:

Strengths (+) and weaknesses ( )

Strengths (+) and weaknesses ( ) Country Report Philippines Country Report Herwin Loman The Philippine government has recently managed to get a budget approved that will further increase investment in infrastructure and public service