On August 31, Philippine Secretary of Trade and Industry Ramon Lopez visited New York and gave a keynote speech at the Philippine Investment Forum.
Before the event, Mr. Lopez talked with NTD reporter about the economic growth in the country, the government initiatives, and their advantages in attracting foreign investments. He also gave his opinion on U.S.-Philippine relationship and President Trump’s strategy to boost the economy.
The Philippine Socio-Economic Environment
Secretary Lopez confidently quoted the positive numbers, saying that the country is experiencing an economic boom. The average growth is around 6.4-6.5% in the last three quarters. The agricultural sector turned from negative to 6.9%. Manufacturing was lagging behind several years ago, with a growth rate of 1-2%, but now 7.9%. And service sector 6.8%. The unemployment rate has gone down from 6.6% to 5.7%.
“It means that you have a solid production sector that provides decent jobs for many Filipinos. That leads to more income, opportunities and eventually brings down poverty levels. It will lead to a stronger middle class. That also means a bigger consumer market,” said the Secretary.
Talking about the consumer base, the Philippines has the youngest population demographic in the world, with the average of 23.1 years.
President Duterte’s social economic agenda covers a wide range. Apart from stopping corruption and streamlining the bureaucracy, it also include aggressive infrastructure development programs to promote regional growth centers outside Metro Manila and spread prosperity around the country.
The economic zones attract foreign investors with an income tax rate as low as 5%. They can continue with the privilege even after the four-year income tax holiday.
Relationship with China
Japan, China, U.S., Singapore, and Hong Kong are the five major trade partners of the Philippines. However, the Philippines has been on a trading deficit, importing more than exporting, with China.
Secretary Lopez, “The renewed relationship with China seemed to open up many doors in term of trade. There is a commitment from the President himself of China to buy more goods. They’ve immediately issued the purchase order to buy 1.7 billion dollars of products from the Philippines. That’s never heard before. All the good things are happening.”
He is optimistic about the investments coming in from China, especially the infrastructure assistance.
Relationship with the U.S.
Secretary Lopez, “Despite all this renewed relationship with non-traditional partners, we remain to be a strong partner with the U.S.. They have been a strong investor and trading partner. They are No. 3 on our list of top trading partners.”
Recently, the Philippine travel goods was included in the GSP program, eligible for a 0% duty as it enters the U.S. market.
Obviously more exporters in the Philippines will benefit from it, and Secretary Lopez is expecting to see companies relocate back to the Philippines to produce big brands in travel goods.
About President Trump
Since President Trump took office in January, the U.S. GDP growth rate has doubled in the second quarter.
Secretary Lopez thinks the pronouncements of President Trump are of good intentions to bring back jobs and investment in the U.S.
“But at the end of the day, the business people will be deciding where best to invest. Countries will have their roles in the value chain,” said Mr. Lopez. “When the higher value industries go back to the U.S., the more production related, labor intensive business will be locating to countries like the Philippines because of our abundance resources in manpower.”