sustaining the philippine economic...

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Japan – Philippines Business Investment Forum

22 November 2016

Ms. Nora K. TerradoUndersecretary, Department of Trade and Industry

Governor, Board of Investments

Sustaining the Philippine Economic Growth


Introduction

PH-JP Investment and Trade Relations

10-Point Socioeconomic Agenda

Comprehensive National Industrial Strategy

Opportunities for Investors and Businessmen

Our Value Proposition: Our People

Sustaining the Philippine Economic Growth through Industrial Strategy

AGENDA


Introduction: Japan Presidential VisitOctober 2016


Major Japanese Companies in the PH

PH-JP Trade and Investments Relations

Manufacturing US$1,064M M

Real Estate Activities US$32 M

Wholesale and Retail TradeUS$20 M

Netherlands33.7%

Japan22.3%

South Korea9.4%

Others34.5%

Total IPA‐Approved Investments, 2015

US$5.4 B

IPA‐Approved Investments from Japan:US$1.2 B


PH-JP Investment and Trade Relations

PH Products for Promotions to JapanElectronics and Semiconductors

IT and Creative Services

Construction Materials/ Construction-related Products

Health and Wellness Products

Food Products Minerals Motor Vehicle Parts Chemicals

Coconut products Wearables Lifestyle and Homestyle

15.40 16.35 17.27 19.15 18.67

8.899.88

12.05 13.90 12.30

6.52 6.47 5.22 5.25 6.37

2011 2012 2013 2014 2015

PH‐JP Trade, 2011‐2015(in US$ B)

Total Trade Exports Imports

19.70%

6.44%

6.43%

2.82%2.80%

61.80%

Top Export Products to Japan, 2011‐2015

Other builders' joinery and carpentry of wood

Photosensitive semiconductor devices

Ignition wiring sets and other wiring sets of a kind used in vehicles, aircraft or ships

Digital monolithic integrated circuits

Bananas, including plantains, fresh or dried

Others


PH-JP Trade and Investment Relations

~US$70T Total Investments

1 JPY = 0.45 PHP


7.0%7.0%6.9%6.7%

5.0%4.8%

2.8%2.0%

‐0.2

2015 GDP Growth Rate of ASEAN Economies Inflation Rates (2010‐2015)

PH GDP Growth Rates (2010‐2015)

20112011

3.7%3.7%

20122012

6.8%6.8%

20132013

7.1%7.1%

20142014

6.1%6.1%

20152015

5.8%5.8%

20102010

7.7%7.7%

2011

3.7%

2012

6.8%

2013

7.1%

2014

6.1%

2015

5.8%

2010

7.7%6‐year moving average

of real GDP growth at 6.2% as of 2015,

the highest since 1978

Historical Key Economic Performance Historical Key Economic Performance


PH GDP 2016 PerformancePH GDP 2016 Performance

6.7%CH6.4%

VN5.02%ID4.3%

MY

• PH GDP Grows 7.1% in Q3‐2016 (6.9% in 1st Semester 2016)

• Fastest growing economy among selected Asian economies

7.1%Q3 2016


Improving Investment & Business ClimateImproving Investment & Business Climate

WIRTOP 20 FOREIGN DIRECT

INVESTMENT DESTINATION

19th2016


Robust Inward Foreign Direct InvestmentRobust Inward Foreign Direct Investment

FDI inflow now at a multi‐decade high of $8B as of Apr 2016, up from $6B in 2015 and $1B just five years

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BOI‐PEZA Approved InvestmentsIn PHP billion

2015 TOP SECTORS (% of Total Investments)

1. Electricity, Gas, Steam & Air Conditioning

2. Manufacturing

3. Real Estate Activities

4. Administrative Support Service Activities

5. Transportation & Storage

2015 TOP SOURCES (% of Total Foreign Investments)

1. Netherlands

2. Japan

3. Singapore

4. U.S.A.

5. South Korea

Steady Investment FlowsSteady Investment Flows

1 JPY = 0.45 PHP


Sustaining the Philippine Economic Gains

11

22

33

44

55

66

77

88

99

1010

11

33

55

77

88

Pres. Duterte’s10–Point Socioeconomic Agenda


Dutter Administration 10-Point Socioeconomic Agenda

Continue and maintain current

macroeconomic policies,

including fiscal, monetary, and trade policies

Institute progressive tax reform and

more effective tax collection, indexing taxes to inflation.

Increase competitiveness and the ease of doing business


Accelerate annual infrastructure

spending to account for 5% of GDP,with Public‐Private

Partnerships playing a key role

Accelerate annual infrastructure

spending to account for 5% of GDP,with Public‐Private

Partnerships playing a key role

Promote rural and value chain development toward increasing

agricultural and rural enterprise productivity and

rural tourism

Duterte Administration 10-Point Socioeconomic Agenda


Ensure security of land tenure to encourage

investments, and address bottle‐necks in land management and titling agencies

Invest in human capital development, including health and education systems, and

match skills and training

Promote science,

technology, and the

creative arts.

Duterte Administration 10-Point Socioeconomic Agenda


Improve social protection

programs, including the government’s

Conditional Cash Transfer program

Strengthen implementation of the Responsible Parenthood and Reproductive Health Law

Duterte Administration 10-Point Socio-economic Agenda

99


Imbedding the 10-Point Socioeconomic Agenda into the

Comprehensive National Industrial Policy

Competitiveness crucial in upgrading, raising regional integration and global value chains

Industrial policy as best way to• create jobs,• reduce poverty• achieve inclusive growth

* Free Trade Area


• Upgrade industries• Remove growth obstacles

GOAL: Improve CompetitivenessGOAL: Improve Competitiveness

• Public sector: Creates the environment conducive for private sector development

• Private sector: proximate source of growth

Government as Facilitator

Government as Facilitator

• Plug in regional production networks • Move up the value chain• Build strong regional economies

GVC‐focused,Cluster‐basedGVC‐focused,Cluster‐based

Imbedding the 10-Point Socioeconomic Agenda into the

Comprehensive National Industrial Policy


Comprehensive National Industrial PolicyStrategy Framework


Comprehensive National Industrial PolicyStrategy Framework

THREE IMPORTANT CHANNELS AFFECTING INDUSTRY GROWTH:

COMPETITION, INNOVATION, PRODUCTIVITY

20

MANUFACTURING SERVICESAGRICULTURE, FISHING, FORESTRY,

MINING

INTERNAL FACTORS: GOVERNMENT POLICIES &PROGRAMS – trade & industry policy,

INSTITUTIONS | INFRASTRUCTURE | MACRO STABILITY | RULE OF LAWPEACE & ORDER | POLITICAL CLIMATE

EXTERNAL FACTORS: GLOBALIZATION | REGIONAL/BILATERAL/MULTILATERAL TRADING ARRANGEMENTS

GLOBAL & REGIONAL PRODUCTION NETWORKS


Comprehensive National Industrial Policy Positioning PH industries in Global Value Chains

Va

lue

Ad

ded

21

Design

Purchasing

Production

Distribution

Marketing

Services

Pre Production Post Production

• Goods: PH already supplies the world e.g. Gap, Coach, Mars, Boing, Airbus, Texas Instruments, Canon, Brother, Epson, Sunpower, Toshiba

• Services: PH already serves clients in the US, Europe, Asia, Australia in IT & Business Process Management (IT BPM)

R&D Most Goods and Services areMADE IN THE WORLD


MANUFACTURING: Structural Change through a Manufacturing Resurgence Program

‐ automotive, aerospace parts ‐ electronics‐ garments, food & resource‐based industries, furniture‐ chemicals, tool & die‐ shipbuilding

‐move to high tech transport equipment, chemicals, electrical machinery

‐manufacturing hubs in regional & global production networks for auto, electronics, machinery, garments, food

‐ high value added activities ‐ upstream industries

(chemicals, iron & steel), med‐tech basic & fabricated metal

Phase I 2014‐2017

Phase II 2018‐2021Phase III 2022‐2025

VISION: A main growth driver, globally competitive & strongly linked Manufacturing Sector with other sectors


AGRIBUSINESS: Catalyst to Drive Regional Economic Transformation

VISION: A transformed agriculture sector from traditional farming to a globally competitive agribusiness sector

‐rubber, coconut, mangoes, coffee, cacao, banana, palm oil & other high value crops

‐ supply chain gaps: strengthen agro‐processing & its linkages to production

‐deepen participation in GVC

‐PH as agribusiness regional hub

‐ strengthen supply chains

‐ upgrade commodity clusters

‐ R&D, access to technologies, finance; regulatory & certification system

Phase I 2014‐2017



SERVICES: Glue that Binds All Sectors Together

‐labor‐intensive sectors: tourism, construction, ship repair, MRO‐infrastructure investments ‐move up ITBPM GVC

‐ PH as regional services hub e.g. training, T&D, etc.

‐ upgrade services especially manufacturing related services

‐ Higher value services e.g. education, design, R&D, finance, infrastructure

‐ engineering services in manufacturing

‐HRD & skills training, innovation ecosystem

Phase I 2014‐2017


VISION: A globally competitive services sector that creates quality jobs, high in the value chain, enabling the country’s structural transformation


Opportunities in the Philippines for Japanese Investors and Businessmen

IT/BPM

Agribusiness and Aquaculture

Smart SMEs

PPP Projects

Manufacturing


Infrastructure Development

348 Economic Zones and IPAs

• 72 Manufacturing EcoZones

• 234 IT Parks and Centers• 21 Agro‐Industrial EcoZones

• 19 Tourism EcoZones• 2 Medical Tourism Zones

PPP and other Infrastructure Projects (in the pipeline)

• NAIA Expressway• LRT Line 1 Cavite Extension• Daang Hari‐SLEX Link Road• Southwest Integrated Transport System (ITS)

• Cavite‐Laguna Expressway• Bulacan Bulk Water Supply

Other Infrastructure Projects under implementation

• MRT Line 7• Metro Manila Skyway Stage 3

Projects under Procurement

• New Bohol Airport Operations, Maintenance and Development

• NLEX‐SLEX Connector Road

Source: BOI‐International Investments Promotion Service (IIPS)



PHILIPPINES

CHINA

KOREA JAPAN

AUSTRALIA

NEW ZEALAND

BRUNEI

MYANMAR VIETNAMTHAILAND

INDONESIACAMBODIA

MALAYSIASINGAPORE LAO

INDIA

CURRENT FREE TRADE ROUTES TO THE PHILIPPINES

SOURCE: DTI HANDBOOK

• 7 Concluded Free Trade Agreements• PH-EFTA | PH-EU | Chile, Mexico, Peru




• Conduct continuing business matchingmissions between Japanese andPhilippine MSMEs

• Provide capacity/institutional buildingactivities for the development ofMSMEs in the Philippines

• Explore the possibility of developingMSME industrial parks


Philippines-Japan Areas of Cooperation




PH in Demographic Sweet Spot

PH complements the aging population



53

74

133

205.5

259.5

344

345

352.375

1143

1230

1619

1734

0 500 1000 1500 2000

Myanmar

Cambodia

Vietnam

Indonesia

Philippines

Malaysia

Thailand

China

Singapore

Taiwan

Hong Kong

Korea

Workers

Source: Japan External Trade Organization (JETRO)

138

285.75

298

373

387.5

635.75

698

944

1456

2255

2263

2325

0 500 1000 1500 2000 2500

Myanmar

Vietnam

Cambodia

Indonesia

Philippines

China

Thailand

Malaysia

Singapore

Korea

Hong Kong

Taiwan

Engineers (mid‐level)

Wages for workers & engineers are relatively lower than China, Malaysia, & Thailand (monthly rates in US$)


Audio Visual Presentation

[Your Business, Our People]

Our Value Proposition: Our People


Thank you.

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