The election of Rodrigo Duterte and Donald Trump as presidents defined the business news in the Philippines in 2016, as their simple remarks could move markets and cause jitters among investors.
Duterte, the former Davao City mayor who brought his bloody anti-crime campaign to the national scene, shocked the business community when he shifted the country’s economic relations away from the US and towards China.
Trump, who will become the 45th US president on Jan. 20, 2017, vowed to bring back jobs to the US by tightening immigration controls and restricting job outsourcing. The Philippines, the world’s call center capital, is edgy.
Aside from Duterte and Trump, here are the other top business news in the Philippines last year.
PH grows fastest in Asia
The Philippines posted one of the fastest growth rates in Asia in 2016. Data from the Philippine Statistics Authority show that its gross domestic product expanded 7.1 percent in the third quarter and 7 percent in the first nine months, beating the government’s target of 6 percent to 7 percent for the year.
The World Bank in turn upgraded its 2016 growth forecast for the Philippines to 6.8 percent from the previous estimate of 6.4 percent.
The Washington-based multilateral lender said it revised upward its projections for the Philippines as a part of its quarterly forecast exercise “considering recent trends.”
“Recent economic trends illustrate the high confidence among investors and consumers, and provide the foundation for a more optimistic outlook for the remainder of 2016 and for 2017,” said World Bank lead economist for the Philippines Birgit Hansl.
The World Bank also revised upwards its 2017 growth projection for the Philippine economy to 6.9 percent from its October estimate of 6.2 percent. In 2018, the economy is expected to expand 7 percent.
The bank said the growth in capital investment would remain the Philippine economy’s primary growth engine.
The Investor Relations Office of Bangko Sentral ng Pilipinas said the Philippines would remain on a “sweet spot” of high growth and manageable inflation in 2017, as more opportunities open up and outweigh the impact of external headwinds.
The government set an economic growth target of 6.5 percent to 7.5 percent and an inflation target of 2 percent to 4 percent in 2017.
DENR shuts down mines
Regina Lopez, the staunch environmentalist who was appointed the secretary of the Department of Environment and Natural Resources, ordered an audit of mines in the country. The audit resulted in ten mines being shut down while another 20 face suspension.
She also cancelled the environmental permits of three nickel mines and warned that three more producers were at risk of losing theirs.
The Philippines, the world’s top nickel ore supplier is reviewing hundreds of environmental compliance certificates, including those granted to mines.
The DENR is expected to come out with a final decision on 30 mining companies. The audit, which started in July 2016, dragged on, hurting the operations of companies.
As a result, the value of mineral production declined 11 percent in the first three quarters from a year ago.
Car sales exceed 300,000
Sales of motor vehicles in the Philippines climbed 22.2 percent year-on-year in November 2016, bringing total sales in the first 11 months to more than 300,000 units.
The Chamber of Automotive Manufacturers of the Philippines Inc. and Truck Manufacturers Association said in a joint report that their members sold a total 32,966 vehicles in November, up from 26,979 units delivered in the same month last year.
“The good sales performance last November was because of enticing promotions and events matched with good demands of our market. With the robust demand, especially this Christmas season, we expect a stable to higher sales by December,” said Campi president Rommel Gutierrez.
Campi said as of November, automotive sales already surpassed the full-year 2015 sales, with 325,468 units sold. This was 24.3 percent higher over last year’s 11-month sales of 261,930 units.
Stocks, peso slide
The peso fell 5.7 percent, while local stocks lost 1.6 percent in volatile trading last year, as the US Federal Reserve’s interest rate hike and Donald Trump’s surprise win in the American election pulled money away from emerging markets such as the Philippines.
The Philippine Stock Exchange index, the 30-company benchmark, closed at 6,840.64 on Dec. 29, the last trading day of the year.
Meanwhile, the peso ended the year at 49.72 against the US dollar, still near a decade low. The local currency depreciated 5.7 percent in 2016.
Jobless rate, poverty ease
Both unemployment rate and poverty incidence eased last year, as the strong economic growth generate thousands of jobs and lifted many people of out poverty.
Results of the Labour Force Survey conducted by the Philippine Statistics Authority show that unemployment rate eased to a record low of 4.7 percent in October from 5.6 percent a year ago.
“This means that the growth of our economy is becoming more inclusive as it engages more and more Filipinos to participate in the labour market,” said Economic Planning Secretary Ernesto Pernia.
Poverty incidence dropped to 21.6 percent of the population in 2015 from 25.2 percent in 2012 and 26.3 percent in 2009, according to PSA.
The National Economic and Development Authority said this meant there were 1.8 million less poor Filipinos last year, compared to 2012. This also put the Duterte administration’s goal to reduce poverty rate to 17 percent by 2022 on track.
“We’re confident that it can be reduced so much more, especially now since we are coming from a much lower base which is at 21.6 percent. And from 2012 to 2015, that’s actually a 3.6-percentage point reduction over a period of three years,” Neda assistant director-general Rosemarie Edillon said.
Online gaming shut down
President Rodrigo Duterte has ordered the closure of online gaming operations in the Philippines, saying corruption in the approval of gaming licenses has become rampant.
The country’s gaming regulator earlier refused to renew the license of PhilWeb Corp., an online gaming operator owned by businessman Roberto Ongpin, after he was singled out by President Duterte as among “oligarchs” that he wanted to destroy.
Meanwhile, Chinese gambling tycoon Jack Lam fled from the Philippines after authorities raided his casino operations in Clark Freeport and Fort Ilocandia, after he allegedly offered a bribe to government officials for the release of over 1,000 Chinese workers in his gaming sites.
The resort’s gaming facility in Clark was also shut down due to lack of permits and alleged illegal or unlicensed gaming operations.
Visitor arrivals hit new record
International visitor arrivals in the Philippines rose 12 percent year-on-year in the first nine months of 2016 to hit a record 4.46 million.
With the increase, the Philippines is on track towards reaching its 6 million tourist arrivals target for the year.
South Korea, US, China, Japan and Australia remained the top five source markets of the Philippines, he added.
For the month of September, visitor arrivals reached 422,943, up by 7.5 percent from 393,589 arrivals in the same month last year. It is the first time that visitor volume for the month of September surpassed the 400,000 mark.
Consistent growth was observed throughout the year with double-digit gain from January to July except for the month of May. The biggest volume was recorded in July while the highest growth was registered in the month of February.
BPO survives Trump’s election
The Information Technology and Business Process Association of the Philippines (IBPAP) expects the continuous growth of the IT and Business Process Management Industry, despite the win of Donald Trump in the US election.
The IT-BPM sector contributes 10 percent to the gross domestic product and provides jobs for over a million Filipinos. IBPAP expects the industry to generate $25 billion this year and over $40 billion by 2022.
Trade deficit widens to $20b
The balance of payments (BoP) position of the Philippines reversed to a deficit in the first 11 months of 2016, pulling down the value of the peso to a near 10-year low, amid a record trade deficit this year.
Data from the Central Bank show that the BoP, which reflects the country’s transactions with the rest of the world, posted a deficit of US$206 million in January to November, a turnaround from the US$2.136-billion surplus a year ago.
The country incurred a record merchandise trade deficit of nearly $20 billion in the first 10 months, as imports continued to outgrow exports. Merchandise trade is the largest component of BoP.
Duterte banks on China investments
President Rodrigo Duterte asked China to invest in the Philippines during his state visit in the world’s second largest economy.
President Duterte’s four-day state visit to China in October healed the bilateral relations between the two countries which were strained by a maritime dispute in the South China Sea.
China-led Asian Infrastructure Investment Bank committed to help fund President Duterte’s infrastructure overhaul, which includes two projects in the capital.
The AIIB will co-finance with the Asian Development Bank and the World Bank, the P37.76-billion Edsa Bus Rapid Transit System and the P23.46-billion Metro Manila flood control project, respectively.
Govt cancels e-vehicle program
The Electric Vehicle Association of the Philippines is adopting a new roadmap for the domestic e-vehicle industry as it looks to recover from the recent decision of the Energy Department to scrap the $500-million electric tricycle project.
The Energy Department previously issued the notice of award to Uzushio Electric Co. Ltd. of Japan and local partner Bemac Electric Transportation Philippines Inc. for the supply of 3,000 units of e-trikes.
Energy Secretary Alfonso Cusi, however, said said the e-trike project proved to be too costly.
The project, largely financed by the ADB and the Clean Technology Fund, was supposed to deploy 100,000 e-trikes nationwide to replace the same number of traditional gasoline-fed tricycles, reduce the transport sector’s annual petroleum consumption by 2.8 percent (equivalent to 89.2 million liters) per year and achieve 79-percent carbon dioxide foot print avoidance.
Bangladesh heist rocks banking sector
The Anti-Money Laundering Council tightened the regulations on money laundering, 10 months after some $81-million were allegedly stolen from Bangladesh Bank’s account in New York and laundered to a Philippine bank.
Officers of AMLC also filed money laundering charges before the Justice Department against several officials of Rizal Commercial Banking Corp. in connection with the$81-million laundering scam that rocked the domestic banking industry in February.
Senate investigations earlier found out that the $81-million fund was stolen by cyber thieves from the account of Bank of Bangladesh in Federal Reserve in New York. The dirty money entered the country’s financial system through an RCBC branch on Jupiter Street in Makati City.
Former RCBC president and chief executive Lorenzo Tan resigned from his post at the height of Senate investigation into the case.
Bangko Sentral also imposed a P1-billion penalty on RCBC for its alleged involvement in the scam.
Govt to terminate ‘endo’ scheme
The Employers Confederation of the Philippines expressed support to the government’s attempt to end the practice of labor contractualization or end-of-contract (endo).
The Labor Department said that since the start of the government’s crackdown against endo, over 25,000 contractual workers were accorded with regular status by their employers. The agency vowed to end labor-only contractualization by the end of 2017. Several companies, however, expressed concern over the plan.
Semiconductor giant Texas Instruments Philippines Inc. opposed measures that would penalize firms which hire contractual workers for a limited period.
