The Philippines has achieved so much in the last few years that the risk of “back-sliding” is a greater concern for international investors heading toward the 2016 presidential elections, a Singapore-based Filipino senior banker at ING Bank said.
Manuel Salak, ING managing director in charge of commercial banking clients and corporate finance at ING Bank NV, said investor appetite on the Philippines was still strong given its stellar performance in recent years but noted that “concerns on continuity” were emerging.
In some other Asian countries, he noted that the economic backdrop had gone too ugly in the last few years that there was no way to go but become better.
“The Philippines is risking it a little bit because from an upside point of view we can still do that but we have achieved so much that the real scare is the downside—if we backslide,” Salak said in an interview at the sidelines of an economic forum jointly organized by ING Bank and the Economic Journalists of the Philippines (Ejap).
In the case of India, Salak said this nation “can’t do any worse” while the news flow out of Indonesia had been bad in the last two to three years. Both countries suffered from large current-account deficits and in the case of Indonesia, a key commodity producer, its woes were aggravated by the slump in commodity prices.
“For us, it’s a different scenario. We’ve done very well. We’ve achieved investment grade. The stock market is at all-time high. Really the question is preservation or small progression,” Salak said.
In the last few years, the Philippines grew faster than its trend growth rate although in the first quarter of 2015, the 5.2-percent expansion—mostly attributed to the government’s underspending—disappointed financial markets.
Salak said it was important that the local private sector would keep up investing to expand their businesses. Typically, he said foreign investors would take their cue from local investors. “The first sign for international investors is if they see that the the locals are investing, still loving their country and putting more commitment,” he said.
Having said that, however, he said the flip-side was that corporate Philippines would have to go out and seek expansion opportunities in the region to take advantage of the creation of a single market under the regional bloc of the Association of Southeast Asian Nations (Asean).