Philippine and Singaporean Economies

Philippine Economy

• The Philippines (PH) could join the top 20 largest economies due to a large population and fast-improving industries, especially in manufacturing.
• BMI anticipates the PH to become the world's 18th largest economy by 2050
• The PH would have a 2.3% share of global wealth, tying with Russia.
• According to the World Bank in 2021:
  • The Philippines ranked 38th with a domestic economy value of $394 billion.
  • Russia ranked 11th with $1.8 trillion.

Singapore's Economy

• Singapore's wealth is attributed to its strategic location in the middle of a trade route that connects Europe and Asia, despite lacking natural resources like coal and oil.
• Labor strikes are not common, even with high unemployment.
• Singapore faces a housing crisis, making it a focus of government intervention.
• It is considered one of the easiest places to do business.

The Four Asian Tigers

• Singapore, Hong Kong, Taiwan, and South Korea.

Factors Impacting Singaporeans' Perceptions of Wealth

• Inequality and the high cost of living contribute to Singaporeans not feeling rich.
• Singapore is the most expensive place to buy and run an automobile and purchase clothing.
• Personal care, household goods, and domestic help are less expensive than in other major cities.
• Singapore has a high GDP per capita.
• The median monthly salary is $3,270, with 20% going to mandatory savings.

SONA 2023 and Economic Growth

• The World Bank reported a 6% overall growth rate, attributed by BBM to strong local demand, consumer spending, steady flow of remittances, and continuing job recoveries.

Economist Expectations for the Philippines in 2024

• Economists predict that 2024 will be better than 2023 due to the lifting of quarantine measures.

Michael Ricafort's Insights (RCBC Chief)

• MSMEs are recovering after the pandemic
• Lowered interest rates are good news for borrowers.
• There will likely be a decrease in borrowing costs due to an increase from the previous year.
  • 450 basic points equal a change from 2% to 6.5%.
  • A reduction of 100-200 basic points can help improve business.

Development Budget Coordination Committee (DBCC)

• Dubai's crude oil price is anticipated to fall as low as $70 US per barrel.

Bangko Sentral ng Pilipinas (BSP)

• CHIEF: Eli M. Remolona Jr.
  • A rate cut is unlikely until inflation is well-anchored on the target of 2-4%.
• The Philippine's interest rates are kept steady at 6.5%.

Danilo Lachica's Observations

• Most integrated circuit design companies rely on Taiwan to develop prototypes due to high costs, longer times, and potential loss of intellectual property.
• If new products and technologies are not introduced in the PH, it will be stuck with legacy products and become obsolete.
• Infrastructure projects should be labor-intensive, but the current program is import-intensive, leading to costs supporting foreign labor.

IBON Foundation

• EXECUTIVE DIRECTOR: Sony Africa
  • Manufacturing should be prioritized by the government for growth.

Philippine Chamber of Commerce and Industry (PCCI) Incoming President, Consul Enunina Mangio

• Efforts to improve the ease of doing business and incentives for foreign investors may attract capital, but external uncertainties could pose challenges.
• Sector-specific strategies and targeted promotion campaigns may play a vital role in attracting FDIs
• LGUs can take a proactive role in helping generate more investments in the countryside.

The Philippine Export Economy

• According to Secretary Lopez of the Department of Trade and Industry (DTI):
  • The ITC Export Potential Assessment validates and quantifies the export industry's potential to nearly double its export levels in the next five years with increased production capacities and addressed trade frictions
  • For December 2021, the US imported 1.0Bworthofgoodsfromthecountry,whileChinaimported1.0B worth of goods from the country, while China imported 1.0Bworthofgoodsfromthecountry,whileChinaimported925.2 million.
  • Philippine exports in these markets accounted for 31.4% or $23.4B of the country's total exports in 2021.
• Products experiencing the most growth, though not the largest exports, include coconut, manufactured goods, and chemicals.

Philippine Statistics Authority

• The trade budget is 17B,with17B, with 17B,with6B allocated for exports.

Export Groups

• Electrical goods:
  • Account for $3.2B worth of exports in just one month.
  • This is the single largest exportation, driven by the PH's electronic industry.
  • The PH is one of the largest producers of DSP chips.
• Agriculture:
  • Accounts for 10% of total exports.
  • Exports total 7B−7B-7B−8B annually and mainly include:
    • Banana (largest)
    • Pineapple
    • Cacao
    • Corn
  • Largely dominated by the USA and China.
  • The PH imported around $1B in one month, followed by Hong Kong, South Korea, and Thailand.
  • The PH is vulnerable to food inflation due to exporting less than it imports in the agricultural industry.
• Business Processing Outsourcing (BPO):
  • Includes call centers.
  • Generates $25B annually.
  • Employs over 1.3M people.
  • Includes services in finance, computer, and information sectors.

Export Economy Considerations

• Even with an $80B export economy, the PH is at potentially dangerous levels
• A large deficit can weaken the peso.
• Coconut products and processed food will become large export products due to urbanization.
• The PH is the 2nd largest exporter of nickel or nickel-based manufactured goods, next to Indonesia.
  • Nickel is in high demand because of vehicle electrification.
• Mining can be viable.

International Business Strategies

• Essential for successful engagement in international business.
• Competitiveness in a market is needed to gain a larger market share.

Strategies for Firms' Competitiveness

• Mission Statement:
  • States the purpose of an organization
  • Should answer the question, "What business are we in?"
  • Serves as the basis for organizational goals.
• Vision Statement:
  • Outlines the long-term aspirations and goals of a company.
  • It is a forward-looking statement describing what the company aims to achieve.
  • Provides direction, purpose, and inspiration.
  • Used to guide strategic planning and decision-making.
• Strategies:
  • Plans for achieving organizational goals.
  • Guiding the organization by providing direction for the goals and strategies.
• Three Basic Business strategies
  • Differentiation from customers with features, quality, reputation, or customer service
  • Responsiveness through ability to respond to changing demands.
  • Low cost.

Value Chain

• Represents the sequence of activities a company undertakes to deliver value.
• Encompasses all activities and processes involved.
• Effective management enhances competitiveness, customer satisfaction, and sustainable growth.
• Continual assessment, adaptation, and innovation are key.

Managing the Value Chain

• Understanding the value chain components of production, marketing, distribution, technology, and human resources
• Analyzing value chain activities that directly contribute to value creation and customer satisfaction
• Optimizing internal operations to eliminate inefficiencies and reduce lead times.
• Collaborating with suppliers and partners
• Focusing on customer value to tailor value chain activities accordingly
• Adopt sustainable practices

Competitiveness

• Relates to the effectiveness of an organization relative to others.
• Organizations compete through price, delivery time, or product/service differentiation.

The International Strategy

• Transfers home-country-based competencies to foreign markets
  • Production Expertise
  • Design skills
  • Brand power
• A comprehensive plan that guides a company's expansion globally by outlining its competitive approaches.

Global Integration vs. Localism

• Global Integration:
  • Refers to increasing interconnectedness among countries, economies, societies, and cultures on a global scale
  • Also Known as globalization
  • Advantages:
    • Economic growth
    • Access to resources
    • Cultural diversity
  • Challenges:
    • Economic inequality
    • Loss of local control
    • Environmental Impact
• Localism:
  • Socio-political economic philosophy that emphasizes local control, self-reliance, and community based decision making
  • Advantages:
    • Community empowerment
    • Resilience to external shocks
    • Cultural identity
  • Challenges:
    • Economic Limitations
    • Potential Isolation
    • Scale and efficiency
• Strategies to balance global integration and localism
  • Promote local entrepreneurship, sustainable agriculture, and community-based projects

PSA (Philippine Statistics Authority)

• The Philippine Gross Domestic Product (GDP) posted a year-on-year growth of:
  • 5.2% - fourth quarter of 2024
  • 5.6% - 2024 full-year GDP growth
• Main contributors to 4th quarter growth
  • 5.5% - repair of motor vehicles and motorcycles
  • 8.5% - financial and insurance activities
  • 7.8% - construction
• Main contributors for the whole year
  • 5.6% - repair of motor vehicles and motorcycles
  • 9% - financial and insurance activities
  • 10.3% - construction
• The Agriculture, forestry, and fishing (AFF) sector posted a year-on-year decline of 1.8%.
  • For the full year of 2024,
    • 5.6% - Industry
    • 6.7% - Services
  • On the other hand, AFF posted a decline of 1.6 percent in full-year 2024.
• Household Final Consumption Expenditure (HFCE) grew year-on-year by 4.7% in the fourth quarter of 2024.
• The following items from 2024 also recorded year-on-year growths:
  • 9.7% - Government Final Consumption Expenditure (GFCE)
  • 4.1% - Gross capital formation
  • 3.15% - Exports of goods and services
  • 3.19% - Imports of goods and services
• For the full year 2024, all major expenditure items also posted growths as the following grew by;
  • HFCE - 4.8%
  • GFCE - 7.2%
  • Gross capital formation - 7.5%
  • Exports of goods and services - 3.4%
  • Imports of goods and services - 4.3%
• Gross National Income grew year-on-year by;
  • 6.2% - fourth quarter growth of 2024,
  • 7.6% - full-year 2024 growth
• Net Primary Income from the rest of the world grew year-on-year by
  • 14.1% - fourth quarter of 2024
  • 26.1% - full-year growth