WHAT are the energy sources for businesses this year? There is a coming together of forces – international and local – that make this year a true Year of the Tiger – traditionally a year of great energy but also one with risks for those who cannot ride the power of a King of the Tigers. beasts.
While many companies have closed and others are in wait-and-see mode, these situations are market openings for new players and those still ready to break through and conquer markets. Business growth and decline has happened much faster in recent years. The health dangers of the pandemic are diminishing. Are you going to wait?
True entrepreneurs, Chinoys and the like, while trying to time a favorable trend, do not wait for ideal conditions. They accept the game of having to adapt to any environment and risks: pandemic, elections, disturbances. Today’s trend is clearly up, although possibly stormy. Why?
Great sources of growth
Three great sources of growth are powerfully converging, beginning to link together like never before.
One is the logistical interconnectivity – internal to the Philippines and international between us and the highest growth area in the world, Asia, which itself is interconnecting at a rapid pace.
Asean is now the second-largest trading bloc with China, with around $800 billion in trade annually and growing rapidly. The 1,000 kilometer Laos-China rail link is completed. Thailand is already exporting rice and fruit faster, fresher and in larger volumes to China. The Thais ordered the addition of a Nong Khai bridge in Laos to increase this interconnection and began their railway construction with China. Despite disputes, Vietnam’s first convenient subway was completed with the help of China. Indonesian interconnecting rails are being built by China, including Indonesian self-reinvention through a resolution to move its capital to Borneo.
(L to R) Indonesian President Joko Widodo, President Rodrigo Duterte, Transport Secretary Arthur Tugade and former Public Works Secretary Mark Villar.
The Philippines is already part of this vibrant trade belt, which will grow even faster unless Sinophobia is expanded by politicians and those who have not studied beyond black and white mainstream media material.
Even during the pandemic, Philippine exports to China increased by 15% to $18 billion, or 30% of the Philippines’ total export volume. FDI continues to grow, with Congress and the Senate modernizing the Civil Service Law, planning to lift many restrictions on foreign investment, which will certainly bring more dynamism to the country, improving our technologies and diversifying our sources and markets for goods, finance and services.
We will be connected to this intercontinental trade belt from Asia, all the way to Europe through the Belt and Road Initiative – physically, digitally. How are we going to use this well?
Presidents Fidel Ramos, Gloria Macapagal Arroyo and Benigno Aquino 3rd have put us back in the map of the commercial belt. President Rodrigo Duterte has shown that building physical infrastructure can be accelerated.
The Manila metro has started, as well as the train to New Clark City, in cooperation with Japan. Two beautiful new bridges in Manila (donated by China), Skyway, Cebu Cordova Link and airports are already built. Transport Secretary Arthur Tugade has just announced the PNR 150 billion Bicol Express PNR in cooperation with China, connecting the city of Calamba to the Bicol region and reducing the journey time to 4 hours from 12 and benefiting 14 million Filipinos a year. The PNR Express will be part of a line linking Manila to Batangas and Sorsogon on what will eventually be a 565 kilometer line, carrying both people and goods. New highways now connect Cavite to Nuvali, Lipa City, Sto. Tomas, Quezon, everywhere to everywhere. The MRT-7 will reduce the journey between parts of the city and Bulacan from 3 hours to 40 minutes. The LRT extension will reduce travel time between Baclaran and Bacoor, Cavite to 25 minutes, by one hour and 10 minutes. Sangley and Bulacan airports and ports are being opened across the country.
The legal and administrative highways of the Regional Comprehensive Economic Partnership trade agreements linking ASEAN to the world’s largest markets have been opened.
Second, digital access. This is already bringing increased education and transactions to previously inaccessible parts of the country of the world. Asia’s large unbanked populations are now beginning to have access to savings, credit and investment services and their incomes are rising. E-commerce is direct between producers, SMEs and markets. Information, training, advertising and logistics costs have been reduced to a fraction. The cross-border market erases market borders.
Third, demographics are in our favour; we have a growing population in the Philippines and India. In Asia, income levels are rising, creating large and close markets. Even the aging population of our neighbors in China, Japan, Hong Kong, etc. are opportunities for us, if we study and respond to market needs.
These three factors are creating exponential growth in the market and the networked offer, interconnecting us nationally and with the world. The markets that are opening up are unmatched in the history of the world. Great wealth will be created, and countries and people who fail to adapt will be left behind.
Are we even learning languages, developing goods and services to sell, or just watching telenovelas, sending pretty pictures, discussing politics?
Potential negative factors
What are the potential negative factors for the business at the present time?
Interest rates are rising, and if they are too high, they can further weaken companies and markets that are only recovering.
Rising inflation will crowd out the purchasing power of our people, and the eventual costs of producing products and services can make us uncompetitive. Partly the effect of countries overprinting money without producing more goods.
War. Ukraine’s crisis between two nuclear superpowers, the United States and Russia, could lead to a $100-$120 oil spike by Goldman Sachs, and supply chain disruptions and embargoes would create shortages. A military conflict, if Taiwan continues to be encouraged to secede, would be more than an economic problem for the Philippines, which could become a target if a war breaks out, if we allow ourselves to be a staging area or a depot of weapons.
Tiger or kitten?
All success and achievement comes from the ability to execute, without which dreams are for the lazy. (Unless one is naturally handicapped). European and American power grew explosively once railroads interconnected across their continents and then when telephones enabled communications. We have the equivalents posed for us today.
All the factors for the Philippines to become a tiger economy are now there. Yes, there are obstacles too, but every successful person and country has overcome them and will overcome them, and will do so even for far greater obstacles. We should stop whining, shooting or wasting time.
The achievement of dreams does not come from the lack of risks and problems, but from the ability to overcome and pay the price. The pandemic is in decline, the potential growth discussed last November, December showed the peak areas and the potential strength of the recovery.
The Year of the Tiger is a year for striped tigers, not a talkative class of kittens. Time for the Philippines to come out roaring?
George Siy is a Wharton-trained international trade practitioner and negotiator, business leader and Chairman Emeritus of the Anvil Business Club. He has advised various Philippine government agencies and organizations in trade negotiations with ASEAN, Japan and the United States.
New Worlds by IDSI (Integrated Development Studies Institute) aims to present frameworks based on a balance between economic theory and historical realities, the success of the field in real businesses and communities, and the attempt for the common good, the culture and spirituality ([email protected])