The Market Monitor Minding the Nation's Business
By Jerry Maglunog
The country’s growing population of 101.6 million, with an average that puts the majority at working age, or what the government calls the “demographic sweet spot,” is among the primary reasons investors are starting to flock to the country.
It’s not just the perceived economic growth and booming business- process outsourcing sector that investors consider when putting in money in a country. They also consider the people who will avail themselves of their product, said a Malaysian-led investor that now has P15-billion investments in the country.
Standard Chartered Bank, a multinational banking and financial-services company headquartered in London, shares the view. “The number of people spells the difference,” said Jeff Ng, the bank’s economist for Southeast Asia. “Market-wise, it’s better for anyone putting money in one destination to give attention to the market being served.”
More people means a country needs more infrastructure to support the growing needs of its people and businesses, Ng said.
He said the projects listed at the public-private partnership (PPP) portal include P300 billion worth of infrastructure that is very attractive to any lender.
But he said he has yet to receive word from the bank’s regional headquarters in Singapore on whether they will expand operations in the Philippines, which, at present, is limited to personal banking, loan offers to small and medium enterprises, and corporate institutions.
“Our signs are open (for expansion, acquisition), but no decision yet,” Ng said.
Standard Chartered currently operates a network of more than 1,200 branches and outlets (including subsidiaries, associates and joint ventures) in more than 70 countries and employs about 87,000 people.
It is a universal bank with operations in consumer, corporate and institutional banking, and treasury services. Although London-based, it does not conduct retail banking in Britain, and 90 percent of its profits come from Asia, Africa and the Middle East.
“Any business or conglomerate, no matter how awash in cash, would not just spend its resources in building any project, whether for expansion or for whatever purpose,” said Enrique Abellana, president of the Rural Bankers Association of the Philippines. “Exhaustive studies must be undertaken.”
Like Ng, this banker said population is a good factor to consider when investing in a country. But he added that population density in a given area is another issue.
In the case of the Philippines, he noted, there is a very big disparity when it comes to the number of people living in the National Capital Region and in the provinces.
“There is severe lack of infrastructure in the provinces. That’s why almost all firms are converging on Metro Manila. This is not good because the provinces are left out, especially those governed by parties not aligned with the President,” Abellana said.
Leading investment advisor Personal Equity Retirement Account (Pera) listed the Philippines as among the safest places to do business, compared to its neighbors in Asia.
But it also lists high power cost, a shaky political situation and red tape as among the red flags for those who are thinking of sinking money into any of the country’s 17 regions. However, Pera added in its study: “There are ups and downs, but the downs outweigh the benefits.”