Business, Personal + Finance

Tuesday, July 05, 2016

Philippines an investment safe haven amidst Brexit



The “Brexit” decision stunned investors around the world, which can create a ripple effect not just in the U.K. but also around the world, wherein few can predict what shape it will take. The exit will be gradual and global and could potentially trigger further volatility due to related events such as a possible breakup of the United Kingdom which is made up of four countries - England, Wales, Scotland, and Northern Ireland.

Governments and economies of the world were in a state of panic amidst the majority decision of UK's citizens to get out of E.U. which wiped out $2 trillion off world markets which also led to a lot of sell-offs and a stampede into “safe havens”.

However, unlike most large economies of the world with running budget deficits and slowing productivity, the Philippines runs a balanced budget, avoided monetary stimulus, growing rapidly and a balance of payments surplus that should insulate it against another financial crisis, which is slowly and quietly doing its own thing.

It does not "stand-out" as a safe haven for investors, because the country has meager share of Foreign Direct Investments in bonds, stocks & in general, comparatively lacking in the raw materials (commodities) compared to our Asian neighbors, or that our tourism traffic is small (but growing) compared to ASEAN despite being “More Fun in the Philippines.”

These usual analyses are the favorite among PH critics (or even bashers) for the longest time. Today, these “Disadvantages” are paradoxically doing some good by protecting us from global economic shocks, swings and volatility.

The  continuing  growth  story

* With 100+ Million in Population, the country has already entered the “economic sweet-spot” – a stage which the number of working-age Filipinos outnumber those who are either too young or too old to work

* GDP increased to 6.9 percent Q1 - 2016 surpassing China and making PH the fastest growing economy in East Asia

* Strong USD inflows from IT-BPM industry of $22 Billion in revenues for 2015 according to IBPAP

* Banko Sentral ng Pilipinas reported 2015 OFW remittances amounted to $26.92 Billion

* A consumption based economy together with steady dollar inflows has provided insulation from China’s yuan devaluation & slowdown and US interest rate increases

* Credit rating upgrades from NICE (BBB), S&P (BBB stable), Fitch (BBB-positive) and Moody’s (Baa2 Stable)

* Upbeat tourism brought in over $5 Billion revenues with 5 Million visitors in 2015 alone with land and property values projected to grow between 5-7 percent annually

The incoming administration recently released its 10-point socioeconomic agenda, presenting it to the business community promising to continue current macroeconomic policies (fiscal, monetary & trade), institute progressive tax reform, increase competitiveness, pursue relaxation of constitutional restrictions on foreign ownership, accelerate infrastructure spending and PPPs, invest in human capital development, promote and build science, technology and creative arts ecosystems, and improve social protection programs.

With the country’s strong fundamentals, fiscal and monetary prudence, political stability together with the contributions from the PH government, businesses and world class growing workforce, it is in a solid growth position as it continues to integrate with the ASEAN Economic Community.

As investors look around the world for safe havens in these turbulent times, I believe the Philippines is one haven to consider!

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The writer is an RFP® - registered financial planner of RFP PH, Licensed Real Estate Broker and Director of CERTA, Inc., a family estate planning and investment advisory firm. To know more, please visit www.certa.ph

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Originally Published in Philstar - The Freeman Newspaper last June 28, 2016.


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