22% of US companies in SE Asia prefer PH for an expansion site

ABOUT 22 percent of American executives and business owners surveyed in Southeast Asia said they would prefer the Philippines as an expansion site.

About 44 percent of American investors in the Philippines also said they saw an “improving” overall business environment, while 41 percent noted it remains the same. Fifteen percent said it is “deteriorating.”

The challenge, according to some US investors in the Philippines, is for the administration to get more effective in boosting business confidence and promoting investments.

Based on the 2018 ASEAN Business Outlook Survey, which polled American executives doing business in the region, 52 percent said this administration is ineffective in this regard. Of the group, 26 percent found the government “very ineffective” while another 26 percent said it waas “slightly ineffective.”

Some or 33 percent identified this administration as “neutral” in boosting business and investment confidence, while only four percent answered that it is “very effective,” and 11 percent said the government is “slightly effective.”
The survey was conducted from May to June 2017.

Published by the American Chamber of Commerce in Singapore and the US Chamber of Commerce, the results of the survey show that the Philippines received low satisfaction ratings in tax structure (15 percent), followed by lack of corruption (19 percent), and new business incentives offered by government (19 percent).

Challenges

It also scored poorly in lack of local protectionism and availability of raw materials (22 percent); infrastructure; ease of moving products through customs; stable government and political system (26 percent).

In addition, respondents have reported dissatisfaction with government agencies such as the Bureau of Customs (52 percent) and Bureau of Internal Revenue (52 percent).

The country also ranked as one of the least preferred expansion sites, ranking seventh out of the 10 Association of Southeast Asian Nations (ASEAN) economies examined.

About 34 percent of US executives said Vietnam is the most attractive expansion site especially for ICT as well as wholesale and retail, while 29 percent chose Myanmar for consumer goods, and Indonesia (29 percent) for transportation and logistics. Only 22 percent chose the Philippines as an expansion location.

People

Despite the low satisfaction rates, American executives gave high satisfaction ratings on the availability of trained personnel and low cost of labor, at 81 percent and 74 percent, respectively.

“At least 50 percent of respondents across all ASEAN countries expect profit increases in 2018, with the highest percentage of respondents in the Philippines (85 percent) and Vietnam (84 percent) expecting profit growth,” the report reads.

Overall, business outlook in ASEAN is “broadly positive.” However, two areas that continue to register very high levels of dissatisfaction are corruption and laws and regulations.

Over a five-year period, two-way trade in goods and services between US and ASEAN has expanded from US$120 billion in 2001 to US$230 billion in 2016. Meanwhile, US foreign direct investment in the region has increased six-fold from under US$50 billion in 2001 to over US$306 billion in 2016.
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