Entrepreneurs have every reason to be optimistic about business prospects next year after the country's economy ended 2018 in much better shape, business leaders told the Philippine News Agency (PNA).
International Chamber of Commerce Philippines (ICCP) founder and chairman Francis Chua said the economy faced headwinds in the early part of the year such as the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law, rising world oil prices, inflation, and interest rates, and challenges in the tourism and agriculture sectors, among others.
“We started the year with very high fuel price, high inflation,” said Chua.
According to the Hamburg-based database firm Statista, the average Organization of Petroleum Exporting Countries (OPEC) crude oil price for this year is at USD71.2 per barrel. This is the highest in four years as average crude oil price in 2015 was at just USD46.49 per barrel, USD40.68 per barrel in 2016, and USD52.51 per barrel in 2017.
Industry sources attributed the hike in world oil price in 2018 to the United States’ threat of sanctions on Iran, the situation of civil unrest and economic collapse in major oil exporter Venezuela, and the continuing robust demand in petroleum.
“Anything that’s due to energy is beyond our control, and even rice to some extent, because we import,” the ICCP chief said.
The rising fuel prices also pumped pressures on prices of local consumer goods, driving inflation rate to breach the government’s target. A 6.7-percent inflation rate was recorded in the months of September and October.
Aside from the oil prices, the supply situation of agricultural products such as rice, fish, and vegetables, among others, were also challenged this year. Severe weather conditions have damaged crops and delayed harvest that affected the supply of some agricultural products.
Meanwhile, global oil prices started to improve around October as OPEC member-states increased their output, while the US softened its sanctions on Iran by granting waivers to eight importers, allowing them to temporarily source oil from the Middle East country.
“Luckily, the world price of fuel collapsed. We are back to normal,” Chua said.
“With the government imposing measures, CPI (consumer price index) being monitored, inflation next year will be very much in control. Thanks to the government. It’s now in control. We end everything, so far, in order,” Chua stressed.
Improve agriculture, infrastructure, ease of doing business
The country’s largest business organization, Philippine Chamber of Commerce and Industry (PCCI), has urged the government to implement policies that will improve the agriculture sector, roll-out the Ease of Doing Business law, and fast-track its “Build, Build, Build” program.
PCCI President Alegria Sibal-Limjoco noted that the agribusiness sector should be a priority of the administration in 2019, improving the local supply of rice and sugar, as well as other agricultural products.
Building infrastructure is also crucial to make logistics and transportation costs low, Limjoco added.
“We need to build more infrastructure, and fast-track the completion of these projects so that Filipinos will feel the impact of these projects -- better roads, more choices of transportation, decongest airports by building more airports in strategic areas, and more farm-to-market roads so we have better access to our local farmers’ products,” the PCCI chief said.
Limjoco added that enterprises are also awaiting the full implementation of the Republic Act 11032 or the Ease of Doing Business (EODB) and Efficient Government services Act of 2018, which was signed by President Rodrigo Duterte in May this year (2018).
The EODB law aims to streamline business processes and to reduce processing time in all government agencies, including local government units (LGUs) and government-owned and controlled corporations, which will make it easier to start a business in the country.
“We also welcome the second package of TRAIN law that will lower corporate income taxes. Although it will take us around 10 years to reduce taxes to 20 percent, this will invite our small and medium enterprises (SMEs) to operate in the formal sector. When you’re in the formal sector, it is easy for you to grow your business,” she said.
“There were challenges that came in 2018, but we are ending the year better. We are optimistic for next year,” Limjoco said.