Maybank Group to deepen presence in PH
REGIONAL banking giant Maybank Group seeks to deepen its presence in the Philippines, which it sees remaining as a crucial market with favorable demographics that could drive up economic growth to 7-8 percent in the years ahead.
Maybank chief executive officer Datuk Abdul Farid Alias, who is in town for the Manila leg of the bank’s “Invest ASEAN (Association of Southeast Asian Nation)” conference series, said in a press briefing on Tuesday that the bank had aspirations to expand locally through organic growth.
Since setting up shop in the Philippines in 1997, he noted that Maybank had since then injected fresh capital into the local unit twice. Total capital brought into the country has amounted to $150 million while the branch network has reached 79 at present.
Invest ASEAN Philippines is the fifth conference in the series and is themed “Riding the boom: ASEAN’s demographic dividends.”
With ASEAN forming a unified community called ASEAN Economic Community (AEC) by the end of this year, Farid said the region was “beginning an era of spectacular growth and free trade.”
With more than 600 million in combined population, AEC will be the third largest economy in Asia after China and India and will be larger than either European Union (507 million) or North American Free Trade Agreement (474 million). It will be the seventh largest economy in the world with a combined gross domestic product (GDP) of $2.3 trillion.
“The Philippines is on the cusp of an economic transformation and the key driver will be its favourable demography. It has a young population with a median age of 23 and declining fertility rate, which will lead to an increase in the number of working adults who will drive domestic demand and spur economic growth. The country’s potential GDP growth currently is 6-7 percent but demographic dividends are expected to drive it to 7-8 percent,” Farid Alias said.
Demographic dividend refers to the boom in resources for economic development and future prosperity as an economy switches from an agrarian to industrial growth drivers. In the early stages, fertility rates fall, but bulk of the population will enter working age and are thus expected to contribute to productivity.
The lower fertility rate is seen to affect the Philippines’ population structure resulting in an increase in the size of the workforce relative to young and old dependents. This is in turn seen leading to a rise in disposable income and the doubling of the middle class which bode well for the Philippines where private consumption is the bedrock of its economy, accounting for about 70 percent of total GDP.
But Farid Alias added that while the Philippines was in a good place – with strong GDP growth, a structural current account surplus, and a robust banking sector to finance future growth – more would have to be done.
“To reap the demographic dividends, the right policies need to be in place. Education and labor policies as well as measures such as building better infrastructure are key to improving employment and productivity for the working-age adults, who will generate growth for the Philippines,” he said.
In the last five years, the country has sustained a growth of over 6 percent whereas in the decade prior to 2010, trend growth rate was slightly below 5 percent.
Meanwhile, Maybank is also upbeat on the implementation of big-ticket infrastructure projects via public-private partnerships, which the group said would boost growth over many years as well as stimulate the broader economy through multiplier effects.
The Invest ASEAN conference series, Maybank officials said, sought to uncover investment opportunities in the region. “It’s investing for ASEAN by ASEAN,” Farid Alias said.
The series – which focuses on ASEAN opportunities while tailoring specific investment themes to each country – kicked off with an ASEAN CEO Summit in Kuala Lumpur in February, which was followed by another conference in Singapore in March, Vietnam in May and Thailand in July. The Invest ASEAN Philippines drew about 600 attendees with representatives from eight countries. The series will wrap up in Indonesia this October.
Maybank Group is Southeast Asia’s fourth largest bank by assets. It has an international network of 2,400 offices in 20 countries.
