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Government pushes development to countryside
Darryl Yu 22 Feb 2017
The election of Philippine President Rodrigo Duterte in June last year had raised hopes for change in many of the country’s neglected regions. Because Duterte is a native of Mindanao – the southernmost major island in the Philippines – his victory, many believed, will mean a shift in the political and economic dynamics from the country’s capital region that includes Metro Manila to the countryside.
 

Philippine Forum

At The Asset’s recent forum in Davao City, the capital of Mindanao, delegates raised the issues facing the countryside. One area for improvement was national connectivity especially in the south. “The real problem with this country is not the traffic, the real problem with this country is connectivity,” states Jose Leviste, chairman of AG&P at the forum. “We have 100 million people and a lot of these people are kids and if they don’t have good connectivity in their schools, they can’t get the best education on offer.”
 
Major local telecom providers have expressed their intention to help resolve the problem. The country’s largest phone carrier PLDT, along with rival Globe, spent US$1.5 billion last year to purchase the telecom assets of San Miguel. Niko Peralta, head value innovations at PLDT’s disruptive business group says the acquisition “will hopefully improve the reach and connectivity to the whole region.”
 
Another area of concern for the countryside was the lack of engagement from the national government. For John Gaisano, chairman of the Davao City Chamber of Commerce and Industry, it all boils down to lack of support. “The small and medium businesses are the primary drivers of the Philippine economy,” he says. “It’s important for the local and national government to support the business chamber and require all businessmen to join the chamber as it is in Germany. That way we can effectively represent them.” For Gaisano, it’s a matter of being able to have a clear platform to voice their opinions when there is an economic policy change.
 
Providing the right incentives for provincial businesses to join the broader capital markets is another pain point for the country. Currently, the Philippine Stock Exchange has only four companies listed on its SME (small and medium enterprises) board. “Going to the capital markets is not a destination on its own. Going to the capital markets is a leap forward to level up. Once you are there, the company needs to live up to various sets of expectations from the investors, from the regulators, from your peers, from your supplier, from your customers,” warms Gabriel Lim, senior vice president at BDO Unibank.
 
Moreover, Lim adds that there is a heavy concentration of banking in the in the national capital region (NCR), where country’s economic activity is centered. “About 55% of the country’s GDP is generated by the NCR,” says Lim.
 
While financial infrastructure is important for a the country’s development, having the skills to use it is equally important. There has been a renewed push in the Philippines to have its citizens learn to invest rather than relying on savings accounts for a sustainable return.
 
“The challenge is to be able to spread investor education wider so we believe that technology should be the prime driver moving forward,” says Ferdinand Berba, president and chief executive officer at Philam Asset Management. “We think going digital is the best way for people to be educated about investments.” Aside from digital tools, Berba also credits the government regulations in lowering the threshold for investments. “There are quite a lot of requirements for people to invest, for example, if you were to open an account you need to have all these identification cards and many people don’t have that,” says Berba.
 
The central bank of the Philippines is pushing for a national ID registry similar to the Aadhaar card in India, which now serves more than a billion people on the sub-continent. The registry is expected to jump-start the country’s e-governance or the application of information and communication technology in government services.
 
Despite the tall task in connecting provincial stakeholders to the rest of the financial market, Jose Sio, executive vice president & chief financial officer at SM Investments Corporation advises entrepreneurs in the provinces to “dream big and dare to do it”. “You should always have a long-term view,” Sio adds. “Work hard and be trustworthy. In business if you want to grow, if you want to be a leader on the long-term basis, you should be trusted, otherwise your growth is limited,” he adds.
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