PHL-based US executives plan bigger operations

US firms are expecting increased growth in trade and investment in the Southeast Asian region in the next five years, with 83 percent of Philippine-based American businessmen indicating interest to expand operations here.

Their optimism was reflected in the Asean Business Outlook Survey 2012/2013 conducted by the US Chamber of Commerce and The American Chambers of Commerce in Asean (Association of Southeast Asian Nations) that covered 356 senior-level executives from across the region.

Asean groups the Philippines, Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand and Vietnam.

The poll showed that 90 percent of Ameri-can firms in Southeast Asia expect their company’s level of trade and investment in the region to increase over the next five years, with 27 percent forecasting high level of
increments.

Philippine-based executives of American firms that participated in the survey are more bullish than the Asean average, as 96 percent of them “have a positive or very positive outlook on the Asean region as an investment opportunity.”

Seventy-three percent of the executives cited their companies having increased or significantly increased their level of trade and investment in the Asean region in the past two years.

Eighty-three percent of the respondents said their companies plan to expand in the Philippines, and none of them expect their operations to contract.

“The top three reasons for expansion in the Philippines are availability of trained personnel/efficient manpower, increasing market share and diversification of customer base,” the survey report said. Other reasons cited were economic recovery and reasonable production costs.

The Philippines was also given the highest preference for expansion among Asean members. Respondents that picked the Philippines as their planned expansion destination increased from 32 percent in 2011 to 49 percent in 2012.

“Profit outlooks are increasingly positive, with the majority of respondents [73 percent] expecting profits to increase in the current year, up from 2011’s figure of 61 percent, and 88 percent expect profits to increase in the coming year, up from 70 percent in 2011,” the report said.

Also, 75 percent of the respondents expect to increase their employee base, with only 5 percent seeing reduction in their work force.

One hundred percent of their expatriate employees, according to the senor-level business executives, are generally satisfied with their assignment to the Philippines, with 79 percent of them wishing to extend their time in the country.

In terms of concerns, the report said the respondents in the Philippines do not consider the tax structure and local protectionism to be major ones in 2012.

“Laws and regulations became less of a concern for respondents in 2012, with only a 43-percent rate of dissatisfaction. Dissatisfaction with infrastructure decreased, with less than a majority of respondents [40 percent] selecting dissatisfied or extremely dissatisfied, compared with 51 percent in 2011,” it added.

Dissatisfaction with “corruption” decreased slightly from 79 percent in 2011 to 73 percent this year, though it remains the leading concern,” the report said.

As for the institutions, respondents are most satisfied with the Bangko Sentral ng Pilipinas or Central Bank (48 percent) and the Department of Finance (46 percent); the highest dissatisfaction rates were received by the Bureau of Customs (51 percent) and the Bureau of Internal Revenue (37 percent).

In summary, the survey report said business climate improved in 2012 for the Philippines with roughly a fifth of respondents facing significant financing constraints and higher costs of borrowing, down from a quarter in 2011.

“Currently, respondents experience a high level of satisfaction in the areas of labor cost, availability of trained personnel and sentiment toward the United States. Housing and office costs, though rising, are also a source of satisfaction. Corruption was by far the greatest drawback for the Philippines, leaving three quarters of the respondents dissatisfied, of which roughly half were extremely dissatisfied.

The quality of infrastructure varies by region and also got mixed reviews. Although employees do not tend to request to work in the Philippines, that percentage is rising and expatriate employee satisfaction in the Philippines is at an all-time high in 2012,” the report said. –MAX V. DE LEON / REPORTER, Businessmirror