Is now, the right time to buy?

Despite a slowdown in 2015, the Philippines positions on the crossover of affluence

and prosperity, with numerous opportunities to effect lasting reforms. The countrys
economy has remained resilient, cushioned by local consumer market, continued
foreign investment, and sound performance in key growth industries. The growth
prospects for the Philippines remain strong. In fact, the International Monetary Fund
(IMF) believes that the country would continue to have the fastest GDP growth
among the biggest economies in the Southeast Asian region. IMF perceives a 6%
growth for the Philippines in 2016, compared to 4.9% for Indonesia, 4.4% for
Malaysia, 3% for Thailand, and 1.8% for Singapore. The Philippines manufacturing
sector has, for the immediate past years, shown signs of renewed and continued
strength. From 2010 to 2015, the sector expanded at a CAGR of 6.8% in real valueadded terms. Outlook for automotive manufacturing is bullish on account of rollout
of infrastructure projects with the present administrations plan to accelerate annual
infrastructure spending to account for 5% of GDP, with Public-Private Partnership
playing a key role. The country has also allocated a budget of $6.4 Billion for its
Manufacturing Resurgence Program (MRP), a long-term, three-phased effort to
improve the manufacturing sectors competitiveness and spur its transition to
higher value added activities, with the end goal of mounting the country into a
recognized manufacturing hub in the areas of automotive, electronics, machinery,
garments, and foods. One of the ticket projects of MRP is the Comprehensive
Automotive Resurgence Strategy (CARS) Program, which will give $593.4 million
worth of inducements available to car manufacturers who will commit to produce
200,000 units of a single model over a six-year period.
The country continues to be an attractive investment target for automotive
manufacturers, this can be attributed to its increasing middle class, proximity to
fast-growing markets in Asia, and young, highly literate population. Furthermore,
cost of labor remains competitive. The average monthly minimum wage in the
Philippines was at $215 compared to $613 in China. Daily minimum wages across
regions also vary from as low as $5.61, this gives investors flexibility in deciding
where to establish its business location.

On the other hand, the increased incentives provided by regulatory bodies for
automotive manufacturers, eg. CARS Program, has amplified the merger and
acquisition activities in the Philippine financial sector. Furthermore, the Banko
Sentral ng Pilipinas (BSP) has further enhanced the incentive system for mergers
and acquisitions. The BSP believes that M&A activities will effect in stronger players
in the market that will help stabilize the financial industry of the country.
Mergers and acquisition activities in the country are expected to heave on the back
of the countrys rapid economic growth. The positive condition of the economy and
the market would not change soon, and the doors of opportunities are expected to
remain open for the next few years. Lastly, with ASEAN integration and the
Philippine growth story as milieu, now is the ideal time for Philippine companies to
expand and look for growth opportunities.