Philippines primed to fulfill growth promise

MANILA, Philippines – The conditions are ripe for the Philippines to break free from years of subpar growth but an environment that draws and keeps investors is needed, the chief of the oldest foreign bank in the country said.

“In the ’70s and ’80s, the Philippines was the country with the biggest promise. Now, the time has come with all the conditions right and the high amount of interest in the new government,” said Mahendra Gursahani, CEO of Standard Chartered Bank in the Philippines, in an interview earlier this week with BusinessWorld.

“The government has what it takes to leave some of the baggage behind and take the country to a different level of economic activity and growth,” he added.

Mr. Gursahani, who was appointed last June, said it was important for the country to sustain the 7.3% economic growth achieved in 2010 and The conditions are ripe for the Philippines to break free from years of subpar growth but an environment that draws and keeps investors is needed, the chief of the oldest foreign bank in the country said.

“In the ’70s and ’80s, the Philippines was the country with the biggest promise. Now, the time has come with all the conditions right and the high amount of interest in the new government,” said Mahendra Gursahani, CEO of Standard Chartered Bank in the Philippines, in an interview earlier this week with BusinessWorld.

“The government has what it takes to leave some of the baggage behind and take the country to a different level of economic activity and growth,” he added.

Mr. Gursahani, who was appointed last June, said it was important for the country to sustain the 7.3% economic growth achieved in 2010 and break free from the “trap” of 3-4% expansion in prior years.

“All indicators are very stable. It’s one of the few countries where inflation has well been well-controlled. Foreign reserves are growing, remittances are consistent. You have all the factors … everything is quite robust. The question is how do you encourage investments because investments are what will create growth, jobs and opportunities,” he said.

“For that you have to start to create a track record. Foreign investors need to know they will operate in a predictable environment,” he added.

The Aquino government is targeting 7-8% economic growth up to the end of its term. Standard Chartered, established in the Philippines in 1872, will do its part to attract investments to the Philippines, Mr. Gursahani said.

Through its wholesale banking business, Standard Chartered is helping clients find investment opportunities here especially that the government is pushing public-private partnerships (PPPs) to address the lack of infrastructure, he said, adding that the bank can help its clients — and also the government — get financing.

“We would play our part in promoting the Philippines as a place for investments but we want to see the government come up with real measures to instill confidence [among investors],” he said.

The government has said it would be putting five PPP projects up for bidding next month.

Last year’s economic growth, said Mr. Gursahani, drove Standard Chartered to another record year in terms of profits. He declined to cite figures, only saying: “All I can say is in 2010, we grew very, very strongly compared to 2009, as all banks in the Philippines have.”

Standard Chartered Plc is expected to report 2010 earnings later this month.

For 2011, Mr. Gursahani said the bank would continue to focus on its wholesale banking and wealth management business, the latter catering to individuals with at least P2.5 million in investable funds. The bank is doubling the number of its wealth relationship managers to 50 in the near term and will recruit more if necessary.

The bank also wants to “upsegment” its personal banking customers — those who maintain the usual deposit accounts — to priority banking, where they can get advice regarding investments.

“People in the Philippines save less than most Asians do… There is a fair amount of financial illiteracy,” Mr. Gursahani said.

Standard Chartered last year launched a financial literacy program targeting college students about to enter the workforce.

“We want to give them a sense of making decisions like responsible credit card usage and responsible loan use so that when they go to the workplace, they know how to manage their financials,” Mr. Gursahani said. “This is not so we can get more business… but so we can play a part in touching at least a small part of the population.” –Judy T. Gulane and Ann Rozainne R. Gregorio, BusinessWorld