Philippines CEOs least worried by China slowdown – survey

MANILA, Philippines — Despite closer ties between the Philippines and China, Philippine business leaders are the least concerned in the Southeast Asian region of a slowdown in demand from the Chinese market, a survey from global research and consultancy firm Oxford Business Group (OBG) showed.

The latest OBG Business Barometer: ASEAN (Association of Southeast Asian Nations) CEO survey, which had more than 400 participants from the Philippines, Indonesia, Thailand and Myanmar, showed that while a slowdown in Chinese demand was seen as the biggest external concern of business leaders with 28 percent saying it is the largest international threat to domestic growth, Philippine executives were the least concerned about it.

OBG Asia regional editor Patrick Cooke said the Philippines has even been encoura-ging Chinese firms to take part in big-ticket infrastructure projects.

As China is now the second biggest source of tourists to the Philippines and real estate developers are banking on Chinese investors and tenants, he said business leaders in the country are expected to be more concerned of a decline in demand from that market.

For Philippine CEOs, the biggest concern is the rising commodity prices which contributed to last year’s trade deficit and high inflation rate.

The current tax environment is also a concern for Philippine business heads, with 59 percent giving negative responses and 23 percent saying it was considered positive.

The Tax Reform for Acceleration and Inclusion (TRAIN) Act or the first package of the government’s tax reform program which took effect last year, reduced personal income tax rates and imposed higher taxes on certain products like petroleum and automobiles, to offset foregone revenues.

This new tax law has been blamed for the high inflation rate seen last year.

Apart from TRAIN, the proposed second package under the government’s tax reform program or the Tax Reform for Attracting Better and Higher Quality Opportunities bill, which seeks to gradually cut the corporate income tax rate to 20 percent from 30 percent and rationalize fiscal incentives enjoyed by investors, is also a concern for some companies.

In terms of access to credit, Philippine executives were generally upbeat.

Despite concerns, investor sentiment in the Philippines and the other markets covered by the survey was positive as 75 percent of the respondents said they are likely or very likely to make a significant capital investment in the next 12 months.

The survey, conducted on a face-to-face basis, covered business leaders representing companies in various industries and of different sizes, to gauge business sentiment over the next 12 months.