Philippines execs among most optimistic in Southeast Asia

MANILA, Philippines — Business executives in the Philippines were among the most optimistic in terms of economic outlook in Southeast Asia in the second quarter even as overall business optimism dipped year-on-year, latest survey results of Grant Thornton showed.

Grant Thornton’s International Business Report showed optimism in the Philippine economy dropped to 81 percent in the second quarter this year from 88 percent last year.

Despite the decline in business optimism, the survey showed business outlook in the Philippines placed second among Southeast Asian countries surveyed, next to Indonesia’s 98 percent.

Grant Thornton said there were significant improvements in what executives considered major constraints in doing business in the Philippines.

In particular, more and more organizations view regulations and red tape as less of a constraint as ratings on such dropped to a six-year low of 20 percent.

Transport infrastructure is also seen to have improved as views on such being a hindrance to business conduct dwindled to a six-year low of 14 percent.

Businesses likewise reported the lack of skilled workers is no longer a major constraint to doing business as ratings dropped by 20 percentage points to 36 percent.

The study showed profitability expectations among Filipino businesses increased by 24 percentage points to 80 percent.

While profitability expectations increased, fewer companies are looking to invest in research and development over the next 12 months as expectations decreased by 14 percentage points to 48 percent this year.

More than half or 54 percent of executives surveyed, meanwhile, intend to expand their businesses in the domestic market in the next 12 months.

As  manufacturing has seen an upsurge in recent months with more foreign investors looking at the Philippines to serve as a hub in the long term, more businesses expect to invest in plant and machinery at 70 percent.

Even as business optimism among Southeast firms was at net 64 percent in the second quarter, Grant Thornton said there are growing concerns on exchange rate fluctuations due to the prospect of further US Federal Reserve rate rises this year.

Of Southeast Asia’s business executives, 36 percent cited exchange rate fluctuations as a constraint on the ability to grow the business. This is higher than the 29 percent in the first quarter and 26 percent in the fourth quarter last year.

“The record levels of optimism are great to see. They are undoubtedly pushed upwards by the continued growth of China, a close trading partner for many of the region’s economies. But what’s really encouraging to see is the greater focus on regional cooperation since the formation of the ASEAN Economic Community in 2015. Closer ties between businesses will provide the future fabric for growth in the region in the years ahead,” P&A Grant Thornton chairperson and chief executive officer Marvin Españo said.