US firms on expansion mode in PH

By Cai U. Ordinario, BusinessMirror

Posted at Aug 27 2013 08:18 AM | Updated as of Aug 27 2013 04:18 PM

MANILA - American businesses in the Philippines are more optimistic about their prospects in the country, with 82 percent of them planning to expand their operations here, the latest survey conducted by the American Chamber of Commerce in the Philippines (AmCham Philippines) and the United States Chamber of Commerce showed.

The study showed the top reasons companies plan to expand in their current locations are potential for business growth (74 percent) and increasing market share (50 percent).

The stability of the government and political system from 2008 up to the present were also cited as attractions. But corruption, insufficient infrastructure and the tax structure remained problematic areas, the study said.

About 15 percent of the US companies in the Philippines said their operation would remain about the same; 3 percent have yet to firm up their future moves.

Still, the Philippines emerged as only the sixth most popular location for business expansion in Southeast Asia for American companies that are currently operating in the region.

Overall, 49 percent of the respondents said their top choice for expansion was Indonesia, followed by Vietnam (43 percent), Thailand
(40 percent), Myanmar (39 percent) and Malaysia (31 percent). The Philippines gained the nod of only 29 percent of the respondents.

In a statement, AmCham Philippines said the rise in optimism among US businesses in the country was driven by a 50-percent increase in satisfaction with the stability of the government and political system in the 2008 to 2013 period.

But survey respondents said corruption, tax structure, poor infrastructure, laws and regulations and ease of moving products through Customs remained key concerns that affect business prospects in the Philippines in the past five years.

“Today 87 percent of respondents are satisfied with the availability of trained personnel in the Philippines, the highest percentage in Asean. Corruption, insufficient infrastructure and the tax structure remain challenges in the country, but it is clear business leaders have seen significant progress in recent years,” AmCham Philippines said.

Data showed around 64 percent of respondents expect their profits to increase in 2013 and 84 percent of them expect profits to go up in 2014.

The survey results also showed 67 percent of the respondents expect their work force to increase in the Philippines in 2013.

Further, the majority, or 79 percent, of respondents are not facing significant financing constraints this year, while 82 percent are not facing higher costs of borrowing in 2013.

Respondents said the main areas of satisfaction included sentiment toward the US at 79 percent, the highest percentage in Asean. The Philippines's strengths also include the availability of low-cost labor, 74 percent; stable government and political system, 62 percent; and personal security, 56 percent.

Other strengths include housing costs, 56 percent; office lease costs, 51 percent; new business incentives offered by government, 44 percent; free movement of goods within the region, 41 percent; and availability of raw materials, 38 percent.

The main concerns were corruption, 59 percent; tax structure, 56 percent; infrastructure, 54 percent; laws and regulations, 46 percent; and ease of moving products through Customs, 44 percent.

In the past decade, the level of dissatisfaction in these areas of concern was highest in corruption with an average of 73 percent, followed by poor infrastructure, 55 percent; laws and regulations, 50 percent; local protectionism, 42 percent; and ease of moving products through Customs, 32 percent.

“Singapore remains one of the most attractive countries in Asean to do business, with low levels of corruption, excellent infrastructure, and predictable laws and regulations,” Simon Kahn, chairman of AmCham Singapore, said.

"Another highlight in the region is the marked improvement of the Philippines. The country has experienced high levels of growth recently and our survey shows why, as business leaders there indicate higher levels of satisfaction across almost all surveyed factors as compared to five years ago,” he added.

The Asean Business Outlook Survey, the latest in a series of surveys conducted by AmCham Singapore and the US Chamber of Commerce, polled senior business leaders from US companies in all 10 Asean members.

The report also presented feedback received from senior members of AmCham Singapore, the American Cambodian Business Council, the American Chamber of Commerce in Indonesia, the American Malaysian Chamber of Commerce, the American Chamber of Commerce in Thailand, the American Chamber of Commerce in Vietnam (Ho Chi Minh City), American business leaders in Brunei Darrusalam, Lao PDR, and Myanmar, and the US Chamber of Commerce.