Let me begin by thanking BDO for this opportunity to address your best clients.
When I look at the number of the Philippines I am very happy to say that they are all very good and for this I always thank the 2 past administrations – one of them is President Gloria Macapagal Arroyo and of course President Benigno Aquino for giving us a very healthy economy. The PSEI has recovered above the 8,000-point level although there are some corrections last week. Inflation remains low. Our growth numbers are strong and we will likely end the year as the fastest growing economy in this part of the world. Consumer confidence is robust.
Politically, the numbers are impressive as well. The last Pulse Asia survey gives President Rodrigo Roa Duterte an unprecedented 91% trust rating. Police morale is at its highest under the leadership of PNP Chief “Bato” de la Rosa. Public support for the President’s anti-crime campaign is unshakeable.
Contrast this with the world that is wracked with so much uncertainty, coupled with Brexit, recession in some of the oil exporting economies, continued weakness some members of the European Union due to high levels of indebtedness among some of its member economies, the massive refugee problem as well as escalating incidence of terrorism in Europe. In the face of all these, our economy stands as one of the rare safe havens for investments.
Our economy is expected to grow between 6.5% and 7.5% this year. This rate of growth likely to continue into the medium term.
The Duterte administration offers a 10-point program socio-economic program intending to sustain both economic expansion and distribute wealth more evenly.
I have said these several times in several occassions that globalization is a wonderful tool to create wealth and we have done that over the last 20 years however it is not a very good tool inclusiveness or spreading that wealth. Our economic program is anchored on effectively raising consumer demand by adjusting the tax rates to levels comparable with the rest of the region. The Department of Finance leads in this effort. We are now in the final of crafting a tax reform package aimed at maintaining public revenues even as we bring down tax rates.
A major pillar of this economic program is increased spending on infrastructure. This should immensely improve the logistics backbone of our economy as well as create jobs in the area that are less progressive. Gains in the efficiency of moving people and goods through the archipelago will bring down costs for consumers and enhance the productivity of our farmers, as well as the manufacturing of the country.
The Duterte economic program seeks to disperse investments as well as rapidly modernize our agriculture. This is the key to more equitable and more inclusive growth. The shift to a federal system of government, or a system where there is more autonomy to the region is seen as a lever to enhance this goal.
The dispersal of our economic activity will be helped by improvements in our ports, airports, rail and road. There is a convergence, therefore, between the increased spending on infra and the pursuit of inclusive growth. The better our infra becomes, the more otherwise inaccessible areas can participate in the national economic mainstream.
Mindanao will be the main beneficiary of economic reforms. It is only an added factor that the President is from this island as well as the Speaker of the House and President of the Senate. The more important and substantial reason is that the island has the most headroom for growth.
For decades, Mindanao has been described as the Land of Promise. It has favorable weather and ideal land for cultivating crops intensively. It has good harbors that will be vital if modern ports are built. Human capital is abundant.
Mindanao’s development has been hampered by armed conflict and by shortsighted economic policies. In many parts, the quality of local governance has been wanting. At the most basic, meager investments in infrastructure over many decades handicapped the island’s inability to grow. The most glaring handicap is unreliable power supply that condemned the island’s cities to years of rotating brownouts.
The handicaps to growth will be addressed in the immediate future. Several power generation plants are being built. Airports are being upgraded. Ports are being improved. Further down the road, a railway will be built to link the cities of Mindanao.
The private sector anticipates the forthcoming growth.
The Floreindos are now building a central business district anchored on the modern container terminal. A modern mixed-use property development will be built in the Davao shoreline. Most significantly, San Miguel Corporation has announceto invest in a very large industrial park — virtually an entire city.
These projects will draw in billions (of) investments. Tens of thousands of jobs will be created. Thousands of smaller support industries will flourish around the major plants.
There will be no want of business opportunity, not only in the Davao region but all throughout the island. From being a net exporter of its population, Mindanao can look forward to inward migration, especially of young talent. The next generation will be suitably employed in high technology industries, BPOs and support businesses of every sort.
From being the Land of Promise, Mindanao will more closely resemble the economic Promised Land. This is how inclusive growth looks like. His is how it will be over the next few years as the 10-point economic reform agenda is vigorously executed.
Government policy, however, constitutes only half the equation.
The other half is private enterprise. As business opportunities present themselves, it is for you the entrepreneurs to seize them. Otherwise the business opportunities will simply pass and the huge investments preparing the ground for business will be lost.
I recall how it was many years ago when, as a much younger entrepreneur, we set up a tissue culture facility. It aspired to improve the banana varieties planted in the area. It was also good business, servicing what turned out to be a major agricultural export. Agricultural enterprises involved in milling, storage, meat and poultry, production on vegetable and other food production will be available to feed growing affluenct society.
Tourism is expected to rise as a source of revenue, bringing with it higher demand for hotel rooms and restaurants, entertainment, even laundry and local transport like bus and van rentals.
New schools from Luzon and abroad like Malayan Colleges used to be called Mapua and Lyceum will open opportunities requiring teachers and residential facilities like dormitories and services like canteens. Demand for uniforms and garments to clothe students and providers of these services will boom.
Even the way we live is expected to change. People will start living in smaller spaces and vertical structures creating demand for new services like cleaning and maintenance. They will travel more often and partake of lifestyle choices, take up new sports and hobbies.
New business process outsourcing companies will be set up and more home based outsourcing jobs are expected as internet speeds increase with higher bandwidth brought about by new infrastructure introduced by telecommunications companies. Many people will be able to do business even at home.
Even the pasalubong industry will take off. Cacao is emerging as a new source of products from tablea to nibs and other confections created by our numerous chefs and entrepreneurs. Lola Abon and her apo now make everything from durian, candy, ice cream, and t-shirts.
I urge you to keep and eye out for possibilities to innovate and create new products. The only way the country can compete in this new world is to constantly innovate. The expected inflow of investments will create will alter the domestic market in remarkable ways.
This is the best time to do business in our country. Interest rates are low. The growth trajectory is nearly certain. Government policies are most supportive. Investments in infra and property will create demand for jobs and, down the line, more robust consumer demand. A golden age for entrepreneurs is in the offing.
My job at the moment is to ensure fiscal stability and sufficient public revenues. Let me assure you we will do our best on those aspects.
Your job, I suppose, is to create more jobs by establishing new and sustainable enterprises. You are, after all, clients of the healthiest bank that promises to make things happen for domestic business.
Thanks you and good day.
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