The Philippines: What A Fantastic Opportunity

Philippines

By John Richardson

The Philippines is in a demographic sweet spot, according to the CIA factbook. In 2013, for instance, 34% of the population was aged between 0-14 and 19.1 was aged between 15-24.

This is potentially fantastic news if the Philippines can do something about its dreadful infrastructure. As the New York Times points out in this article:

  • Infrastructure problems now threaten to hold the Philippines back from reaching the next level, economically speaking, and improving its manufacturing base. Problems with infrastructure have surpassed corruption as the leading economic obstacle, according to the most recent World Economic Forum competitiveness report
  • For example, Manila is plagued by power failures, chronic water shortages, an antiquated telecommunications system, deteriorating roads and bridges and a subpar airport.

The problem with too many chemicals companies, though, is that they are still obsessed with shareholder value. Even Jack Welch,w ho is credited with helping developing shareholder value, now thinks that it is a dumb idea.

But the danger remains that if you went to your board directors and said, “Let’s ‘seed’ demand in the Philippines by helping the country improve its infrastructure,” this might be career suicide, as the benefits of such a scheme wouldn’t be delivered in the next financial quarter, or the quarter after that – or even the quarter after that. It could take many years for your strategy to yield a return.

It is commonsense, really, given that China has bad demographics. The Philippines can, thus, become one of the “go to” destinations for outsourcing as China continues to lose its edge in low-cost manufacturing.

This is similar to $10bn opportunity in polymer sales represented by partnering India as tries to tackle its economically ruinous and morally bankrupt sanitation crisis.

New bridges, roads etc. in the Philippines would require lots of chemicals and polymers and your company, whether local or overseas, would be in a strong position to win lots of orders if you work with the government, and with the companies that build these bridges and roads.

The alternative to pursuing these types  of opportunities is to sit back and hope a rising economic tide will still lift all boats – i.e. every chemicals company will remain successful. In an ever-more complex and uncertain economic, social and political environment this would be a big mistake.

We will return to this theme in more detail in a series of blog posts over the next few weeks.

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