Manila is a relatively short plane ride from Singapore, but a world apart. In Singapore, as I reported last week, the ASEAN Economic Community (AEC) is the topic of the minute (even if some officials admit it’s “a lot of hope and not a whole lot of change, yet.”) In the Philippines, on the other hand, one high ranking government official estimated awareness of ASEAN at about seven percent in the general population and roughly 30 percent among businesses. He could not site any numbers for the AEC specifically.
Instead of focusing on ASEAN, AEC, or trade, the Philippines is focused on fulfilling its own potential. “We are no longer the sick man of Asia,” one economist declared; “we may not be the prettiest girl in town, but we are turning heads.” That optimism is widespread and share equally by government officials, business executives, and academics.
This optimism stems from the trifecta of an improved macro environment, upbeat investor confidence, and continued reforms. Or, as one executive phrased it, government transparency + strong fundamentals + continued growth = great things in the Philippines today. Indeed, the reforms implemented by the current administration have been key to the good news coming out of this country lately. For example, the Philippines has made great strides in managing corruption, moving up yearly in the Corruptions Perception Index, and improving the business climate (Ease of Doing Business rankings have also been moving in the right direction). Recently, the World Bank has suggested that the Philippines and Vietnam are the economies to watch in 2016.
It is clear to this visitor that the Philippines still has a ways to go in developing both infrastructure and the economy. New roads and public transportation systems are badly needed, as are updates to ports, airports, and even connections between islands. Likewise, the country faces an urgent issue of needing to broaden and deepen the tax base to bring in new revenues: we have heard that in this nation with a workforce of some 40 million, only one million workers regularly pay taxes.
Even in spite of these issues, the untampered optimism is certainly catching. As everyone I have encountered has pointed out, the Philippines’ potential can no longer be ignored.
By: Sarah Singer
Assistant Director of Michigan State University's International Business Center