Australia firms cite corruption as top concern in Philippines operations

MANILA, Philippines — Corruption, barriers to ownership, and infrastructure gaps have topped the list of challenges facing Australian firms operating in the Philippines, a new study showed.

Results of the Australian Business in ASEAN Survey 2017 showed that  52 percent of the respondents cited corruption as the foremost concern among Australian firms doing business in the Philippines.

 Barriers to ownership and investment were the second major concern (38 percent) followed by infrastructure gaps (31 percent).

 Other notable challenges in the country cited by Australian companies are political instability (24 percent), taxation (24 percent), and cost of operations (21 percent).

The Australian business community in the Philippines is composed mostly of services firms, followed by manufacturing and industrial companies, the report said.

Despite these challenges, the Philippines ranked as the third most preferred destination for expansion in Southeast Asia among Australian companies.

The Philippines was tied at third position with Indonesia, with expansion rates of 15 percent each.

Vietnam emerged as the region’s most popular market for expansion at 22 percent, followed by Myanmar. Brunei was the least attractive market for Australian firms.

Top growth drivers for the Philippines are its economic conditions (72 percent), proximity to customers (59 percent), and ease of doing business (45 percent).

 “Philippine trade with Australia has increased significantly over recent years while there has also been growing Australian investor interest on the Philippines. Areas such as agribusiness, information technology, education, training and development, infrastructure, energy and mining are some of the sectors being targeted,” the report said.

 “The Philippine government has been active in pursuing economic reforms as well as programs to attack corruption in order to encourage more foreign investments. Further expansion of trade and investment links will continue with enhanced cooperation in defense and law enforcement,” it added.

 As of 2015, total stock of Australian investment in the Philippines was A$10 billion, while total stock of Philippine investment in Australia was valued at A$473 million.

 Bilateral merchandise trade between Philippines and Australia has expanded to A$2.5 billion in 2016, while services trade have also grown to A$1.5 billion.

 In line with Australia’s bullish prospects on the growth of the countries within the Association of Southeast Asian Nations, an Australia-ASEAN Chamber of Commerce was launched officially in Manila.