The Philippines’ transport market

From the November 2016 issue.

With new President Rodrigo Duterte taking a hard-line approach to reforming the country, is the Philippines’ transport equipment industry ready to follow suit?

From the moment Rodrigo Duterte was elected in May 2016, the controversial President of the Philippines didn’t waste any time getting to work. First came a brutal anti-narcotics campaign that has driven up homicides in the country, followed by the public denunciation of US President Barack Obama and a threat to withdraw from the United Nations.

“Duterte is not just crass and brutal, he is alarmingly volatile,” The Economist was quick to judge, claiming that investors are now demanding a higher risk premium to hold Philippine assets, while locals worry about the President denouncing their businesses as transgressors without producing any evidence.

“All this, naturally, frightens both local and foreign investors and threatens to undermine the Philippines’ newly acquired status as South-East Asia’s economic star,” The Economist elaborated – pointing to a different, less violent narrative that has budded parallel to Duterte’s much publicised war on crime.

According to the World Bank, the Philippines is an ASEAN powerhouse in the making. The country’s economy grew seven per cent year-on-year in the second quarter of 2016  – roughly double the long-run rate, and faster even than China. The population is young and English speaking, and a booming service sector is keeping talent from seeking their fortunes abroad, in turn anchoring strong domestic consumption.

For a country that was once dubbed the Sick Man of Asia, that’s a promising turn of events, says Motoo Konishi, the World Bank’s Country Director for the Philippines. “There is macroeconomic stability, and the fiscal situation of the government is sound and improving [too].”

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