Creating access for growth

MANILA, Philippines - On a recent trip abroad, I saw beautiful furniture pieces that stood out for the precision of their construction. I was pleasantly surprised to learn that they were made in Cebu, a region full of skilled craftsmen whose works are now being appreciated in houses worldwide.

At a time when trade is already driving world economies, it is still exciting that individuals —particularly those from far-flung and remote locations — are now capable of bringing their work to the world stage. This improves livelihood opportunities on a small scale, but factor in the multiplier effect as it extends across communities, and it can now directly impact the economy.  

Here, one element is crucial: Access.

What is access? It is the bridge that lets you move into new territories, or the internet connection that enables you to reach world markets from a single location. In short, access facilitates increased interaction and trade among individuals, businesses, and countries. While markets represent platforms for transactions to take place, access provides the means for markets to operate.

We were once limited to resources and people within our immediate vicinity. Transportation, communications systems, and trade networks have evolved since. As a result, the potential for success among individuals and countries has increased as growth avenues that didn’t previously exist are now available. And this march towards greater access is accelerating.

FedEx commissioned a study titled Measuring Access – the Access Index™, to determine quantitative impact and provide insight into the significance of access on a national level. A total of 75 countries (including the Philippines) were evaluated based on physical and information access. The Index revealed four interesting insights: physical and information access are closely aligned; it enables faster economic growth; greater access relates strongly to higher levels of income; and it is critical for economic survival and growth.

To illustrate, the top 10 countries in the Access Indexâ„¢ had an average GDP per capita growth rate of 22.6 percent over a decade, whereas growth among the bottom 10 was only 14.1 percent over the same period. The Philippines was in 65th place, highlighting a huge potential for economic development that can be accelerated by increasing trade channels.

Recent government statistics show that the Philippines is boosting international trade and investment. According to the Bangko Sentral ng Pilipinas (BSP), net foreign direct investments (FDI) grew by about 10 percent to $2.033 billion in 2012, surpassing the $1.5 billion target for the year. This was the first time in five years that the FDI breached the $2-billion mark, and is the highest total since $2.916 billion was posted in 2007.  This has led Fitch Ratings to upgrade the Philippines to ‘Investment Grade’ status.

These are buoyed by the government’s initiatives to increase infrastructure spending. This year, the government is expected to spend P299.4 billion for infra-related projects, equivalent to 2.5 percent of the gross domestic product or GDP. Next year, infrastructure spending is forecast to rise by 28.4 percent to P418.2 billion or three percent of GDP.

These efforts have led to two crucial outcomes. One, the Philippines has seen improvements in the perception of its logistics quality. Based on the Logistics Performance Index (LPI) of the World Bank, the Philippines scored 3.02 and ranked 52nd in a list of 154 countries in 2012. The LPI is the weighted average of the country scores on six key dimensions:  efficiency of the clearance process by border control agencies, including Customs; quality of trade and transport related infrastructure; ease of arranging competitively priced shipments; competence and quality of logistics services; ability to track and trace consignments; and timeliness of shipments in reaching destination within the scheduled or expected delivery time.

The second is economic growth. National Economic Development Authority (NEDA) figures show that the Philippines gross domestic product (GDP) recorded a 6.6 percent growth in 2012. In 2013, NEDA forecasts the Philippine GDP to expand by seven percent. Total exports are also expected to increase by 15 percent in 2013.  Recently, credit rating agency Standard and Poor released a report that the surging GDP growth in the Philippines has led it to overtake Indonesia as Southeast Asia’s new economic leader.

The government is determined to further develop its infrastructure systems and encourage investments to boost the economy. Whether it’s through air, land, or sea, FedEx is supporting this direction by increasing our commitment to the Philippines and providing better access to Asian and world markets through our portfolio of services and solutions. In the years to come, access will become even more vital for the Asia-Pacific region and the Philippines.

As markets grow and new free trade agreements are forged, businesses will thrive or stagnate depending on their level of access to raw materials, machinery, and components, technology, or finance.

Amidst the changes in the global marketplace, access will enable the country to increasingly participate in the opportunities that this will bring, enhance its economy, and improve people’s overall standards of living.