US and Philippines: Foreign Direct Investments
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Fostering Competitiveness of the Philippines to Attract Foreign Direct Investments
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Outline of Business Report Presentation
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1.0 Overview of post-financial crisis economy !2.0 Philippine introduction !3.0 Competitiveness and Growth !4.0 Foreign Direct Investment Trends !5.0 Hurdles for the Philippines !6.0 Public Policy and Government Action Recommendations !7.0 Conclusion
2008 Financial Crisis
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2.8M people lost jobs !Banks closed. Companies froze. !U.S. slowed down -8.3% GDP decline !Europe was in crisis !Asian Market Decline !
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1.0 Overview of the post-financial crisis economy
SHIFT OF MOMENTUM FROM
WEST TO EAST
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Foreign Direct Investment in the United States and U.S. Direct Investment Abroad, Annual Inflows and Outflows, 1990-2011 (in billions of dollars)
Ripples of financial crisis seemed to have missed the Philippines
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2.0 Philippines
Growth in GDP
Real Estate Boom Fuelled by Low Lending Rates
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source: http://brycggroup.com/category/bgperspectives/
Deepening Capital Markets
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http://quotes.wsj.com/PH/XPHS/PSEI/index-interactive-chart
Good Governance = Good Economics
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Growing Tourism Industry
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3.0 Competitiveness and Growth
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3.0 Competitiveness and Growth
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In our analysis, we focused on the potential growth of
certain sectors in the Philippines by understanding the
measures and factors that have been critical for
building certain competitive edges.
4.0 Trends of Foreign Direct Investments
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Convenience of Doing Business
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Starting a business 175 170 16Dealing with construction permits 88 99 43Getting electricity 121 33 21Registering property 101 121 35Getting Credit 86 86 1Protecting Investors 52 128 4Paying taxes 137 131 36Trading Across Borders 54 42 5Enforcing Contracts 147 114 30Resolving insolvency 144 100 42
Labor and Employment
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Literacy Rate
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96.7% 93.5% 93.1%
Infrastructure
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Infrastructure Rank (out of 148) Score(1-7)
Philippines 96 3.4
Malaysia 29 5.2
Indonesia 61 4.2
Tax and Ownership Structure
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Infrastructure Rank (out of 148)
Philippines 86
Malaysia 14
Indonesia 61
Growing Consumption
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Philippines has a relatively high percentage of
private consumption in terms of contribution
to GDP (12%).
Non-economic Factors
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Country Economic Impact (per highest impact disaster)
People Killed (per common disaster)
People Affected (per common disaster)
$29 million 123 477,641
$34 million 6 17,614
$11.3 million 2,360 111,101
4.0 Hurdles for the Philippine Government
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(1) High levels of corruption, strict labor laws, and bureaucracy in business approvals
35 days 6 days 48 days
5.0 Hurdles for the Philippine Government
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(2) Insufficient Investment In Infrastructure
4.0 Hurdles for the Philippine Government
Land Telecommunications Electricity
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(3) High Tax Rates
4.0 Hurdles for the Philippine Government
46.6% 24.5% 34.5%
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(4) Non-economic Factor
4.0 Hurdles for the Philippine Government
Need for a sustainable supply chain and logistics during natural disasters
5.0 Public Policy and Government Action Recommendation
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5.0 Public Policy and Government Action Recommendation
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(1) Higher Investment in Education and Proper Implementation of K-12 Curriculum
5.0 Public Policy and Government Action Recommendation
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(2) Proper Execution of Imposed Prudent Measures and Risk Management Practices by the Central Bank
5.0 Public Policy and Government Action Recommendation
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(3) Restructure Tax Rates
5.0 Public Policy and Government Action Recommendation
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(4) Push for Transparency and Accountability
5.0 Public Policy and Government Action Recommendation
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(5) Continue Additional Spending on Infrastructure and R&D
5.0 Public Policy and Government Action Recommendation
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(6) Tilt the Playing Field through Incentives
5.0 Public Policy and Government Action Recommendation
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(1) Higher Investment in Education and Proper Implementation of K-12 Curriculum
(2) Proper Execution of Imposed Prudent Measures and Risk Management Practices by the Central Bank
(3) Restructure Tax Rates(4) Push for Transparency and Accountability(5) Continue Additional Spending on Infrastructure and R&D(6) Tilt the Playing Field through Incentives
6.0 Conclusion
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The Philippines, given its current momentum and position in the global economy, can be more competitive by pushing for proper public policy changes, structural
actions and smooth execution.