James Quigley, New York-based executive vice chairman for international corporate and investment banking at BofA Merrill Lynch, said in a briefing on Wednesday that 20 years ago, chief executive officers of big multinational corporations would say it was difficult to do business in the Philippines because everything would depend on who you know and whom you were connected to.
“But now I think there is greater transparency, higher fundamental comfort level of doing business in the country. As companies around the world diversify their manufacturing footprint, given the Philippines’ centralized location in Asia, its historical close ties with the United States, and because of its highly regarded free democracy that works, with its strong demographics, it is a place where you can move your manufacturing operations to other than China,” said Quigley, who is in town to attend the Asian Development Bank meetings.
“Should it continue to do the right thing—that will increase its share of FDI [foreign direct investment] flows,” he said. “I feel very strongly that as MNCs look to move labor-intensive manufacturing operations to emerging markets, the Philippines can increasingly become the preferred destination of those FDIs.”
Based on feedback from corporate leaders around the world, Quigley said investors were becoming “uniformly comfortable” with the actions of the Philippine government.
The BofA Merrill Lynch executive said investors were happy to see public fiscal sector surpluses, more equity and fixed capital formation and a sound local banking system.
“The demographics are compelling with a growing middle class, a need for significant infrastructure investments and the increasing world-class multinational companies based in Manila,” Quigley said.
The investment banker added that Manila was likewise logistically well situated within Asia. Today, he said worker remittances were still important but in the context of overall economy, it was becoming less important.
“There’s real growth locally. People are focused on demographics, on political stability and the success of the democracy and local policies,” he said.
At present, the investment banker said many multinational corporations were diversifying out of China in the same way that financial institutions spread out risk assets to mitigate earnings volatility or that asset managers invest in a pool of assets to temper volatility in returns.
“Gone are the days of over-concentration of manufacturing in one jurisdiction, and CEOs, from the standpoint of good corporate governance and business practice and risk management, are looking to diversify their manufacturing facilities. I think the Philippines stands to benefit from that,” he said.
Other emerging markets in Asia that were attracting a lot of interest from those setting up overseas factories were India, Indonesia, Vietnam and Thailand.
By: Doris C. Dumlao
Philippine Daily Inquirer
May 3, 2012
