Credit Suisse sees strong 2015 for PH

MANILA, Philippines–The Philippines’ consumption-led economy is expected to outperform its peers in 2015, aided to a large degree by revenues from the business process outsourcing industry, in addition to dollar remittances from expatriate Filipinos.

In an interview, Credit Suisse Asia-Pacific vice chair Jose Isidro Camacho said the ongoing boom in the BPO sector had given a “second engine” to the country whose consumers were once fueled predominantly by dollars sent home by overseas Filipino workers.
“Now, I think we’ve seen a fundamental and structural change in the economy, and this will power the Philippines forward this year,” said Camacho, who was Secretary of Finance before he joined the international investment banking giant.

“It’s a very significant development, especially when you consider that a big part of revenues in BPOs actually go to compensation, which is being spent by young professionals,” he explained. “The consumption story has gotten even stronger. It’s not just being driven by remittances.”

Because of this, Credit Suisse expects to see a strong performance this year from Philippine retailers, consumer products manufacturers, logistics firms, as well as companies peripherally involved in the consumption business.

Camacho pointed out, however, that the even bigger structural change that happened over the last few years was the increase in the contribution of investments — especially from domestic private businesses — in the economy.

He was referring to conglomerates that, traditionally, have been more conservative but have since turned more aggressive in and out of their core businesses.

This year, Credit Suisse expects to be even more active in the Philippine capital markets, using the investment bank’s strong showing in 2014 as a springboard.

“Last year was the best year we’ve ever had. That’s why we were named ‘best foreign investment bank in the Philippines’ for the first time,” he said. “We’ve been traditionally the best foreign bank in Indonesia, Singapore and Vietnam. But I think the Philippines has finally gotten to the top of the heap in terms of Southeast Asia, in terms of its attractiveness.”

“That’s why I come to Manila more often,” Camacho said. “There’s a lot more business to be done.”

Going forward, Camacho said local policymakers should guard against any investment slowdown brought about by the political uncertainty associated with next year’s presidential polls.

“People always talk about the elections in 2016 and how that might put a pause to what people are doing, whether it’s investing or something else,” Camacho said. “That’s probably the one thing to watch out for — if people start taking a wait-and-see attitude, if projects get deferred or slowed down.”