As delegates flock to Manila APEC hosting brings economic gains

MANILA, Philippines - The Philippines has spent more than P28 million in hosting this year’s gathering of the Asia-Pacific Economic Cooperation (APEC), which will culminate this month, capping the Aquino administration’s six-year global pitch of the country’s economic progress.

According to the Department of Budget and Management (DBM), the government has started spending for the year-long APEC meetings since 2010. Funds were sourced from the budget of the Department of Foreign Affairs. 

In total,  the government has spent P28.323 million for the gathering, broken down for each year as follows: P4.183 million in 2010, P4.012 million in 2011, P3.742 million in 2012, P5.087 million in 2013, P4.974 million in 2014 and P6.325 million this year.

“The amount will cover for everything – from preparations to the actual events,” the DBM said.

Over the past five years, the Philippines has been home to three significant economic events, starting with the Asian Development Bank (ADB) Board of Governors’ Meetings in Manila in May 2012, followed by the World Economic Forum (WEF) East Asia Summit last year.

The APEC meetings are the last under Aquino’s administration, although there are indications the trend of the country hosting conferences and events will continue beginning with the meetings of the Association of Southeast Asian Nations in 2017.

“We have been very aggressive on bidding on these events,” said Finance assistant secretary Ma. Teresa Habitan, who has been with the Department of Finance (DOF) for the past 38 years and has been part of the three events.

Hosting these gatherings comes with a price however. Aside from the P28-million APEC costs, the three-day ADB meetings cost the government P3.622 billion, although the amount was also spread out for five years. The money came from the DOF budget.

Expenses for WEF meetings were unavailable.

“I think it was during this administration when IRO had the most involvement on organizing government events,” said Editha Martin, director of the central bank’s Investor Relations Office (IRO), in a phone interview.

MICE industry

Officials have justified money spent for these events by highlighting potential economic benefits in the long run. In fact, it is an industry they wanted to develop, called MICE, – meetings, incentives, conferences and exhibitions – whose primary goal is to put the host country on the world map as a prime tourist destination. The strategy has been used by other countries such as Singapore, the US and the UK, to attract tourists by giving them the reason first to go here: to attend business meetings and discussions.

Sherboll Bayona, chief of MICE and special events division at the Department of Tourism, said the country is  “definitely” benefiting from its push towards MICE.

“Aside from the economic impact, there is also the unquantifiable knowledge transfer happening when we host these events,” Bayona said, pertaining to the capacity building and training government workers get from organizing the events.

The main benefit, however, comes from the so-called “multiplier effect.” This happens when one-peso of spending generates economic activity that spills over to different sectors and help provide jobs to people. In 2009, a study by then National Statistical Coordination Board said tourism, in particular, generates good multiplier effect, particularly in the hotel and restaurant industries and recreational activities.

Jobs in hotels and restaurants, specifically, grew 7.7 percent in the third quarter of 2008 at a time internal tourism expenditure –  or the spending connected with tourism in the country –  has grown by more than a fifth.

Bayona said the Philippines does not yet have specific data on how MICE alone impacts the economy, although she said such may not be far from what other countries have reported.

In the US, for example, the Convention Industry Council has estimated that 1.7 million jobs are directly employed under MICE. The industry itself contributes $60 billion in labor revenues and assist the government on meeting revenue targets by contributing $14.3 billion.

“Most of these people are sponsored to go here so definitely, once they spend, they spend more than the average and that’s where we get more (revenues),” Bayona explained.

For ADB meetings alone, a total of 5,000 guests have been reported, while around 1,000 participants from the public and private sector flocked during the WEF summit. Martin said the year-long APEC is appearing to have attracted “around 4,000” attendees so far.

The biggest gain, however, could be traced from the change in image the country gets from hosting international events, said Glen Agustin, DOT’s chief tourism operations officer.

“We want them (guests) to have a positive image of our country so that when they go back to their homes, they will be able to tell their families and friends to consider the Philippines as a travel destination,” Agustin said in a separate phone interview.

Habitan said at least during the Aquino administration, developments worked on the country’s favor to allow it to be noticed by the world. She cited economic gains such as strong growth and a number of credit rating upgrades as signals the Philippines is ready to hold these events.

According to the global rankings of the International Congress and Convention Association (ICCA), the Philippines has posted improvements on the number of international events being hosted in the country. From an average of 22 meetings over the past 11 years, the country served as the place of choice of 46 conferences in 2014. That was up from 27 when the Aquino administration took over in 2010.

“Of course you have to prove that you have enough capacities and capabilities to host these events given the amount that they require,” Habitan explained.

Challenges

Funds are on top of the list. While the Philippines under Aquino managed to keep the budget deficit in check, other countries did not have the same experience. Greece, for instance, went into a downward spiral after it spent billions in borrowed funds during its hosting of the Olympics in 2004. The debt-ridden country has lost more than a quarter of its economic output to the ongoing crisis Infrastructure is another issue, Bank of the Philippine Islands economist Nicholas Antonio Mapa said. “Substantial investments in infrastructure are needed. For example, it’s a bad thing that they are only fixing NAIA (Ninoy Aquino International Airport) 1 now just to get it in time for the APEC,” he said.

“Nonetheless, the end result is good, of course, since at the end of the day, you will have an improved airport,” Mapa added.

While MICE can act as stimulus for the government to pursue public projects faster, Mapa said “hopefully, we will be more proactive, than reactive” in terms of infrastructure development in the future.

For Malyn Molina, managing director of EON Public Relations, the country has “areas to work on” to make it an “ideal” MICE destination such as Singapore, which hosted 142 events last year to become the top Asian nation in the ICCA ranking.

EON had worked with the government in more than 20 projects— including the ADB and APEC gatherings –  over the past 17 years.

“The Philippines is not yet an ideal venue for MICE events because of several factors, including infrastructure and connectivity issues,” Molina said in an e-mail.

“However, just like in the past years when we have hosted a lot more international conferences, we expect this to continue in the next few years,” she said.