Grant Thornton survey finds Philippine business leaders among world’s most bullish

BUSINESS LEADERS in the Philippines remain among the world’s most optimistic about the economy’s overall outlook, according to a quarterly survey which advisory service provider Grant Thornton conducted among 2,500 respondents across 36 economies in May-June last year.

A summary of findings of Grant Thornton’s International Business Report (IBR) that was e-mailed to journalists showed Philippine business leaders overall optimism (total optimistic less total pessimistic) level at 86% in 2017’s fourth quarter — a slight improvement over the preceding three months’ 84%, the highest reading in three quarters and six points more than the 80% in 2016’s final quarter. The country’s best reading on record, so far, was logged at 98% in the first three months of 2017.

Grant Thornton described respondents worldwide as chief executive officers, managing directors, chairmen or other senior executives from across industries.

The entire 2017 saw an 88% overall optimism in the Philippines that was the best reading since 2014’s 90%.

The latest quarterly reading placed the Philippines fourth behind Indonesia (100%), Finland (96%) and the Netherlands (92%), and was better than the 58% for Asia Pacific — itself the region’s “historic high” according to Grant Thornton — the Association of Southeast Asian Nations (ASEAN) and worldwide.

“In the Philippines, overall optimism among business leaders remains high,” P&A Grant Thornton said in a statement accompanying the summary of survey findings.

“Results of the survey show that businesses are very confident about the economy,” Ma. Victoria C. Españo, chairperson and chief executive of P&A Grant Thornton, said in the statement.

“For one, the recent passage of the first tranche of tax reforms is expected to support public spending and investments in infrastructure and social services which, in turn, will create more opportunities for businesses.”

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By issue, the Philippines topped the rest in terms of expectations of revenue increase in the next 12 months (88%, matching readings of the preceding three months and of the third quarter of 2011 and the highest since the first quarter 2011’s 94%), of an increase in hiring (66%, compared to the third quarter’s 70% and fourth quarter 2016’s 54%) as well as profitability in the next 12 months (86%, the highest since the first quarter 2011’s 88%).

The country placed second in terms of planned increase in investment in plants and machinery (54%, in a tie with Malaysia and behind Nigeria’s 80%).

The Philippines placed third in terms of expectations of an increase in the next 12 months in:

• investment in new buildings (36%, behind Nigeria’s 68% and Turkey’s 38%);

• research and development (44%, behind Nigeria’s 84% and China’s 58%);

• investment in technology (62%, in a tie with Argentina and behind Nigeria’s 92% and Australia’s 68%).

Finally, while the Philippines was eighth — together with Finland and New Zealand — with 80% in terms of expecting to offer employees a pay hike in the next 12 months, it was ninth with 22% of Philippine respondents saying they would offer above-inflation raise in the same period.

GROWTH INITIATIVES
In terms of growth measures planned for the next 12 months (percentage of respondents giving up to three options):

• 50% said they will improve sales force effectiveness;

• 48% said they will develop and/or launch a new product or service;

• 40% will invest more in marketing;

• 40% will expand business in the Philippines;

• 34% will give incentives for productivity improvement;

• 24% will tap new funding sources;

• 14% will recruit specialist talent;

• eight percent will expand business overseas;

• and eight percent will merge with or acquire another business.

“Local businesses are seeing an increase in employment and plan to improve sales force effectiveness, as well as develop and launch new products or services,” Ms. Españo said.

In Asia and the Pacific, optimism among businessmen reached 58%, an increase of 17 percentage points over the third quarter. The global figure at 58% is higher than the preceding three months’ 49%.

“Confidence has boomed in Asia Pacific, reaching its highest peak in the history of the IBR,” Ms. Españo noted.

“While China has experienced growing levels of optimism over the past year or so, Japan’s break into positive territory is a real sign of change in the region. As global trade improves, firms in Japan and China are also thinking about the future and investing in long-term growth,” she added.

“This positive business sentiment in the region is an opportunity that Philippines businesses must consider as they plan for their long-term expansion and growth plans outside the Philippines.” — VVS

As published in BusinessWorld, dated 09 January 2018