RP can still attract investments in consumer-related industries

Despite growing pessimism over the Asian Economy as a whole, the Philippines could still be singled out as a flexible environment for direct foreign investments, according to foreign economic experts.

However, they said there would be a shift in interests from large, capital-intensive heavy industries to consumer-related industries which investors perceive as more flexible and safer areas of investments.

First Secretary Axel Gohner who heads the Federal Republic of Germany’s economic and commercial section in the Philippines, said European investors have not lost interest in the country and were continuously looking for investment opportunities.

Gohner said that German investors, in particular, remain optimistic about the political developments that have smoothened out uncertainties over the investment climate in the country.

Gohner said the Arroyo administration’s efforts to formalize the mechanisms for policy consultation between the Philippine government and the international business community was a positive step that would encourage investment inflows in the future.

The most attractive sectors in the Philippines, according to Gohner, are consumer-related industries such as automotive, furniture, electronics, consumer goods and such industries with inherent flexibility.

"Construction and other heavy industries like telecommunications are traditional areas that German investors would look at but we see growth in consumer-related industries," he said.

According to Gohner, the government’s huge budget deficit is a major disincentive for foreign investors looking at prospects in infrastructure and related industries.

Although there are pending plans for major infrastructure projects, especially in the capital, Gohner expressed pessimism these projects would materialize at all.

"But in areas like automotive, particularly for luxury vehicles, there will be continuous growth," Gohner said as he explained that this was primarily due to the country’s social structure that allowed room for expansion in high-end consumer goods.

"It’s simply because the same people that can afford these high-end consumer products will keep making more money," Gohner said. "This is the sector that is capable of paying so it makes sense that we will continue to see growth in expensive consumer products."

He said this reading of the Philippine market was the primary reason that German automaker BMW Motors decided to take over the operations of its Philippine business from Columbia Motors, a local automotive company owned by Jose Alvarez.

"BMW itself has made a decision to directly take over all its offshore businesses, but its decision to maintain its presence in the Philippines was prompted by its optimism over the prospects in this market," Gohner explained.

He pointed out that despite its similarities with other Asian economies, the Philippines was markedly different compared to say countries like Indonesia.

Gohner said the Philippines only needs to invest more in promotions to establish itself as a major investment haven and attract more investors in industries where there were clear indications of growth.