US firms show increased satisfaction in 9 out of 16 factors

Better Phl business climate cited

MANILA, Philippines - The Philippine business environment continued to improve over the last five years but cited the lack of infrastructure and the impact of the truck ban as major concerns, according to a survey by the US Chamber of Commerce and American Chambers of Commerce in the Association of Southeast Asian Nations (ASEAN).

The ASEAN Business Outlook Survey 2015 showed that the satisfaction of American firms on the Philippine business environment improved with increases seen in nine out of 16 factors over the last five years, led by a 23-percent satisfaction with the stability of the government and political system.

The survey which serves as a key barometer for US business sentiment in Southeast Asia, was conducted from May 5 to June 4 this year, covering 588 American firms across the region.

Other business factors in which American firms showed greater satisfaction in the Philippines were in terms of availability of low cost labor, housing costs, lack of corruption, lack of local protectionism, laws and regulations, personal security, sentiment towards the US, and tax structure.

Despite the improvements in satisfaction seen over the five-year period, American firms see the lack of infrastructure as a big challenge as the dissatisfaction rate rose by 13 percent to 67 percent from 54 percent previously.

“This is the immediate outcome of the Supreme Court ruling on the unconstitutionality of the Disbursement Acceleration Program, wherein the Executive branch has to hold in abeyance infrastructure projects in the pipeline,” the American Chamber of Commerce of the Philippines (AmCham) said in a statement.

A higher dissatisfaction rate was likewise seen in ease of moving products through customs to 55 percent from 44 percent with the truck ban imposed in the City of Manila in February seen to have negatively affected the movement of goods and disrupted national economic performance.

Other factors with increased dissatisfaction rates were new business incentives offered by government, office lease costs and availability of raw materials.

Amid improved satisfaction on the business environment, 61 percent of American firms in the Philippines said they expect their workforce to increase this year.

Most American firms also have positive outlook on profits as 57 percent expect an increase in earnings this year and 74 percent see an uptick in 2015.

“This shows that American business executives remain positive and are willing to invest and expand investments if major concerns are adequately addressed with urgency,” the AmCham Philippines said.

While satisfaction on the Philippine business environment improved over the last five years, the country was not among the priority markets for future business expansion in the region.

The survey showed Indonesia, Vietnam and Myanmar were the top markets for expansion.

With the ASEAN integration expected by the end of next year, 81 percent of American firms polled in the region believe the establishment of the  ASEAN Economic Community (AEC) is important in helping their companies do business.

Member firms of AmCham Philippines also see the high importance of ASEAN markets with 71 percent of the view that such will continue to be relevant for years.

Majority or almost 90 percent of AmCham Philippines’ members also expect the increased level of trade in the ASEAN region over the past two years to continue to rise over the next five years.

The AEC seeks to create a single market and production base to promote free movement of goods, services, investment and skilled labor within the region.

“Hence, we believe that ASEAN integration will bring vibrant business activities and unique opportunities for Filipinos, as the Philippines has the availability of trained personnel as its strength,” the AmCham Philippines said.