Rising Business Confidence
Investor confidence in the Philippines is unmistakably rising. Several factors support this—chief of which is the solid macro-economic fundamentals in place. Another major factor is the business-friendly policies of the Marcos government.
We may probably have the most pro-business administration in years, judging from the early policy pronouncements emanating from Malacañang. The recent slew of mega deals coming out from media reports will validate this argument.
Investors do not bet their money in the Philippines if the horizon in the future is bleak. Confidence on the business environment is critical to decisions in pushing through with mergers and acquisitions. Major M&A deals are happening now in the Philippines, which is a reflection of business confidence.
Just late last week, the infrastructure unit of the Aboitiz Group announced it was acquiring GMR-Megawide Cebu Airport Corp., the operator of Mactan-Cebu International Airport, for P25 billion. Mega transactions like this are another proof that we have a dynamic capital market that can accommodate this type of deal.
Both parties—the Aboitiz Group and the Megawide Group—are heavily investing in infrastructure projects, which President Ferdinand Marcos Jr. is supporting as a continuation of the policy of the previous Duterte administration.
Another transaction that caught my eye is the Ayala Group’s acquisition of a 60-percent stake in logistics provider Air21 Holdings Inc. for P6 billion. These two acquisitions, I believe, are just a few of the mega deals that are about to unfold in the coming weeks or months.
I’m sure more of these kinds of transactions are in the offing. The Department of Transportation, for one, has disclosed that it plans to offer the operations of four major airports under the government’s public- private partnership program. Under review and possibly up for bidding are the contracts to develop, operate and maintain the New Bohol (Panglao), Davao, Iloilo and Kalibo airports.
My own Prime Asset Ventures Inc. under the Villar Group has expressed interest in the privatization of major Philippine airports. Several major companies will likely make their own bids to upgrade and operate these airports.
The DOTr is also considering bidding out the development and rehabilitation of the Ninoy Aquino International Airport, which was scrapped by the past administration. The Naia project hopes to ease the worsening air traffic congestion at the main gateway and resolve capacity constraints by reconfiguring and renovating facilities and enhancing operation and maintenance.
Naia remains a strategic economic and tourism driver for Metro Manila and the whole Philippines. A major upgrade will improve the airport’s efficiency and increase its capacity to meet the rising passenger demand from the Philippines and the Asia Pacific region.
To reiterate what I wrote just last week, investing more in concrete projects like airports will create jobs, connect communities and generate economic opportunities for the people.
Infrastructure projects, in addition, will revive tourism and promote new destinations that could not be reached before. They promote the image of the Philippines as a modern country governed by leaders who build structures for the public good.
Building infrastructure projects, of course, will require the cooperation of the private sector. President Marcos now has the support of big conglomerates, which have the wherewithal to fund such massive projects. I am referring to members of the Private Sector Advisory Council, who committed to undertake ongoing and upcoming infrastructure programs.
BPOs also upbeat
Business process outsourcing companies are similarly upbeat on the prospects of the Philippine economy despite rising inflation and increasing interest rates. The Information Technology and Business Process Association of the Philippines sees export revenues of the sector rising 10 percent this year to $32.43 billion from $29.49 billion in 2021.
The higher revenues mean more employment and demand for office space. This vibrant source of foreign exchange expects to create 1.1 million new jobs in six years in keeping with economic recovery goals set by the new administration.
The business grouping has noted a surge in global market demand, which can only mean more high-value and high-paying jobs for Filipinos over the next six years.
BPO operations, aside from the millions of job openings they create, support construction and the property sector. They lead to the generation of jobs in the allied sectors, empower their workers to spend and invest, and help stabilize the peso against other currencies.