A brutal year

"Growth targets were missed."



The years 2019 and 2018 were years of underperformance for the Philippine economy. Growth targets were missed.

2019 and 2018 were also challenging years for the country’s largest corporations in revenues and profits.  Still, the companies, big and small, somehow managed to navigate the rough waters of 2018 and 2019. They reported a double-digit rise in sales and a single-digit gain in profits.

The economy, as measured by the total output of goods and services (the Gross Domestic Product or GDP), grew by just 5.9 percent in 2019 and 6.2 percent in 2018. 

These rates are lower than the growth rate of 6.7 percent in 2017 and 6.9 percent in 2016.  The 2019 GDP growth of 5.9 percent is the lowest in eight years, since the disappointing 3.7-percent growth of 2011.

The four-year average (2016-2019) GDP growth is 6.425 percent—below the low-end target of 6.5 percent and the high-end goal of 7.5 percent in those four years, under the Duterte administration.  

The lower-than-average 5.9 percent growth in 2019 was blamed by the World Bank on “a rapid deceleration in investment growth and a weak external environment.”   

The Philippine economy was hampered by the delayed approval of the 2019 budget and the adverse impact of weak global manufacturing and trade, and trade tensions between the United States and China, two of the Philippines’ biggest trading partners and export markets.

To be sure, the Philippines has had unprecedented 84 quarters or 21 years of consecutive growth—the longest economic expansion in the country’s history.

This 2020 should have been better, with the economy projected by the World Bank to grow by 6.1 percent in 2020 and by 6.2 percent in 2021.

2020 has proved brutal not only for corporations but most Filipinos.

On Jan. 3, Iran’s famous general, Qassem Suleimani, was assassinated by the United States in a drone strike. This raised tension in the Middle East, if not the possibility of a larger war on a global front.

On Jan. 7, Chinese officials announced they had identified a new virus, the novel virus, 2019-nCoV ARD (acute respiratory disease).  

On Jan. 11, China announced its first death from the virus, a 61-year-old man who had bought goods from a seafood market in Wuhan, the capital of Hubei province in Central China.

On Jan. 12, restive Taal Volcano erupted with full fury, devastating the agriculture, industry and tourism of Calabarzon and paralyzing Metro Manila for several days. 

On Feb. 11, the now-named COVID-19 had killed 1,016 and infected 42,638.  Thirty-eight airlines stopped flights to and from China. The virus had spread to 28 countries and territories.

On Feb. 11, President Rodrigo Duterte finally sent notice to the US to terminate the Visiting Forces Agreement.  For the first time since Magellan in 1521, there won’t be foreign troops in the Philippines. Congratulations, President Duterte.

Volcano, virus, VFA.  The three apocalypse horses of the First Quarter Storm circa 2020.

COVID-19 could shatter from 30 percent to 50 percent of Philippine tourism arrivals and revenues.  

Ending the VFA, which gives US soldiers visa free stay and access to major military facilities and military operations in the Philippines, could upset the power balance in the Asia Pacific as Duterte pivots towards China away from the apron strings of America. 

Meanwhile, in 2018, the BizNewsAsia 1000 Largest Corporations registered combined revenues of P19,166 billion (P19.166 trillion), up a respectable 12 percent or P2.048 trillion from the P17.118 trillion they posted in 2017.

Combined 2018 profits of the BizNewsAsia 1000 reached just P1.925 trillion, up a paltry P51 billion or 2.7 percent from the P1.874-trillion profits reported in 2017. 

The P1.925-trillion profits were good enough to turn in a return on equity of 11.16 percent, more than double the 2018 inflation rate of 5.2 percent. With a return on sales of 10 percent, the BizNewsAsia 1000 earned P10 for every P100 of sales. Return assets was single digit but still respectable, 3.33 percent.

The 50 largest corporations chalked up P10.1 trillion in sales, up 15.66 percent over 2017, and a hefty 52.7 percent of the total revenues of the BizNewsAsia 1000.

The Top 50 made P930.9 billion in profits, up just 4.9 percent but better than the 2.7 percent gain of the BizNewsAsia 1000 in net income.  The Top 50’s profits represented 48.34 percent of the BizNewsAsia 1000’s combined income.

For the 10th consecutive year since the BizNewsAsia 1000 begun, diversified conglomerate San Miguel Corp. topped the list, with commanding revenues of P1.024 trillion, a record, and a huge increase of 24 percent from its previous high of P826-billion revenues in 2017.

Under Chairman Eduardo C. Cojuangco Jr. and president Ramon S. Ang, SMC has successfully remade itself over the past 10 years to become the business behemoth that it is today.

In 2019, San Miguel is poised to again become the largest private industrial company in revenues.  

SMC posted revenues of P758.634 billion in the first nine months of 2019, a minuscule drop from the P761.173 billion in 2018. If you annualize the nine-month sales to produce revenues of 12 months, SMC will again hit the P1-trillion mark.  Revenue gain, however, could be flat and so will probably the profits. 

In the first nine months of 2019, SMC profits hit just P39.69 billion, down 5.27 percent from P41.9 billion in January to September 2018.

RSA reengineered SMC into what it is today—a nimble, green, colossal, hugely profitable money-spinner with No. 1 position in at least eight industry areas—beer (San Miguel Brewery), food (San Miguel Pure Foods), packaging (San Miguel Packaging Group), power generation (SMC Global Power Holdings), fuel and oil (Petron Corp.), infrastructure (SMC Infrastructure), fun to drive premium cars (BMW), and cement (Northern Cement).  

About 60 percent of San Miguel’s business, revenues, and profits is the handiwork of Ramon S. Ang.  

In 2008, SMC had revenues of only P168 billion.  By end-2018, revenues had ballooned to a record P1,024 billion (P1.024 trillion), a six-fold or a 509 percent increase in 10 years or a 50.9 percent rise every year.

[email protected]

Topics: Tony Lopez , Philippine economy , Gross Domestic Product , GDP , COVID-19 , VFA
COMMENT DISCLAIMER: Reader comments posted on this Web site are not in any way endorsed by Manila Standard. Comments are views by readers who exercise their right to free expression and they do not necessarily represent or reflect the position or viewpoint of While reserving this publication’s right to delete comments that are deemed offensive, indecent or inconsistent with Manila Standard editorial standards, Manila Standard may not be held liable for any false information posted by readers in this comments section.
AdvertisementGMA-Working Pillars of the House