The Stratbase team went to Cebu and Cagayan de Oro last week to hold our Stratbase Business Roundtable Discussions with business leaders and chambers of commerce in the Visayas and Mindanao. We believe it is important to know the sentiments of businesses in other parts of the country. It is they who know best what is happening in their respective spheres.
What we gathered was this: local businesses believe that the Philippines has distinct strengths and competencies, that there are specific opportunities available to us that we can maximize, that challenges remain, but that we could act on and address these challenges. They share the belief that the Philippines can be a premiere destination for both local and foreign investors.
The strengths are many, but it is these three that emerge: we have a young and dynamic population, we are rich in natural resources, and we have a strategic location at the heart of the Indo-Pacific region.
Our population of 118 million has a median age of 25 — this is a huge pool of actual and potential talent, eager to learn and participate in the economy. This makes for a booming and large consumer market, as well as a dynamic workforce. According to the think tank ASEAN+3 Macroeconomic Research Office (AMRO), the Philippine population is expected to be among the youngest in the region, with the number of working-age individuals seen to peak by 2051 — the latest among Southeast Asian economies.
The Philippines is also rich in natural resources. There is a huge potential to grow our blue economy, an industry identified by business leaders to be “untapped” especially since we are first and foremost, a maritime nation. We also have huge reserves of critical minerals such as copper and nickel which are essential components as we transition into clean energy.
The Philippines’ strategic location makes it a vital gateway for over 600 million people in the ASEAN market and a natural entry point to East Asian economies. It is positioned at a key junction for international shipping and airlines. For example, business leaders from Cebu talked about how the city is the gateway between Visayas and Mindanao. Their international airport also provides easy access to different parts of Asia. Hence, Cebu leaders are confident that the province and the region has huge potential to make the area very competitive, not just in the Philippines, but in Southeast Asia.
This location of the Philippines at the heart of the Indo-Pacific region also offers boundless opportunities. The region is said to be a key growth driver for the global economy in the coming years. In light of the recent geopolitical tensions, major global economies have been looking to derisk and decouple to shift investments to countries that share the same values that they hold.
Notwithstanding this, there are roadblocks in making the Philippines a premier investment destination, both for foreign and domestic businesses. According to the Visayas and Mindanao business leaders, while there has been interest by foreign investors to enter their region, they are having difficulty doing so due to inadequate infrastructure, the high cost of electricity, and bureaucratic concerns in starting a business. There are also misconceptions that foreigners have on the security risks in the Mindanao region — even though certain cities of the region are peaceful and have thriving business environments.
The business leaders also said that given new technologies and the world’s entry into Industry 4.0, investing in the education of the Filipino youth to upskill and reskill them is a must. They are concerned that manpower in the country is decreasing — many Filipinos are seeking jobs abroad and many also lack the skills necessary to do certain jobs.
We need to strengthen the technical and vocational education and training (TVET) program of the government and equip and train the young population to be industry ready.
Business leaders also said they need greater support to boost competencies in the following sectors: trading, agriculture, manufacturing (furniture, food, steel, light materials such as food packaging and garments), arts, the creative industry, and Information and Communication Technologies (business process outsourcing or BPO and knowledge process outsourcing or KPO), among others.
To address these concerns, business leaders from Cagayan de Oro and Cebu urge the government to listen to the concerns of the business sector and work closely with them. They also propose developing more renewable energy sources and constructing physical infrastructure, modernizing the agriculture sector, investing in connectivity, and increasing exports, since the country is importing more than we are exporting.
The business leaders affirmed the private sectors’ commitment and willingness to work with the government to develop a more attractive business environment in the region for both domestic and foreign corporations.
Our macroeconomic fundamentals are sound, with GDP growing by 6.3% in the second quarter of 2024. The Philippines remains on track to be the fastest-growing economy in the Southeast Asian region. We build on our innate strengths and on the dynamic consumption patterns of our population. But this is not enough. The economy can grow further if investments come into the country, which would create more quality, secure, green jobs for the people.
Local businesses, with their exposure to the economic realities of our country and their respective regions, have shared their grounded, realistic, and more importantly actionable insights.
We hope the administration is listening.
Victor Andres “Dindo” C. Manhit is the president of the Stratbase ADR Institute.
