SWOT Analysis Philippines

SWOT - Philippines - SWOT - Q4 2014
Philippines - Economy - 03 Jul 2014

Political
SWOT ANALYSIS

Strengths The Philippines is one of Asia's oldest and liveliest democracies. The
current constitution, framed in 1987 following the ousting of dictator
Ferdinand Marcos, guarantees 'life, liberty and property' in a US-style bill
of rights.
Weaknesses The executive often faces delays getting its bills through a legislature
dominated by the Philippines' old landed families, business tycoons and
'showbiz' celebrities.
Rumours of military coup plots are frequent. Disaffected junior officers
have staged a series of mutinies in recent years, while the top brass
played a decisive role in the 'people power' uprisings of 1986 and 2001.
Opportunities President Benigno Aquino III of the Liberal Party has promised to root out
the excesses of the preceding administration, which could help to
recover resources lost to corruption in past years.
Tentative plans to adopt a parliamentary-style constitution, a process
referred to locally as charter change, or 'cha cha', could reduce the
concentration of executive power. Plans to eventually move towards a
federal structure would decentralise political power and very likely
improve regional governance.
Development plans are on the cards following the government's signing
of the final comprehensive peace deal with the nation's largest Muslim
rebel force, the Moro Islamic Liberation Front. The government is also
seeking a peace agreement with the communist New People's Army,
which also poses a threat in the region, but progress in the talks has been
slow.
Threats Kidnappings and bombings by separatist groups, such as the Abu Sayyaf
and the MNLF, are expected during our forecast period.
The existence of more than 100 private militias controlled by local
warlords poses an additional security risk, as evidenced by the
Maguindanao massacre in 2009.
Economic
SWOT ANALYSIS

Strengths Private consumption is a major driver of economic growth, generating
more than 70% of GDP. A youthful and rapidly expanding population is
likely to support these dynamics.
Home-bound remittances from the 8mn overseas Filipino workers are a
key source of national income and provide much-needed support to the
country's consumption and balance of payments.
Weaknesses Although the government has done well to decrease its fiscal deficit
(particularly under the Aquino administration), spending inefficiencies as
well as revenue collection efficacy remain substantial concerns.
The jobless rate will remain high as long as economic growth falls short
of the level needed to create jobs for the fast-expanding labour force.
Opportunities The government could ease pressure on its fiscal accounts by
broadening the tax base and eliminating graft at the Bureau of Internal
Revenue.
Outsourcing could provide the Philippines, given its low-cost English-
speaking workforce, with a valuable source of foreign exchange.
Threats Concerns persist over the underperformance of revenue collection
agencies. Failure to improve tax collections will constrain further ratings
improvements, which in turn threatens to curb foreign investment.
The export sector is geared towards manufactured products, especially
electronics, which are vulnerable to a weakening of the external
economic environment since late 2008.
Ongoing maritime dispute over claims to parts of the South China Sea
raises China sanctions risk.
Business Environment
SWOT ANALYSIS

Strengths A low-cost but educated, English-speaking workforce is the Philippines'
greatest business strength. A number of Western firms have shifted their
operations, particularly call centres, to the Philippines.
The Philippines is a member of the Association of South East Asian
Nations Free Trade Area, under which the association's 10 member
states are committed to reducing tariff and non-tariff trade barriers.
Weaknesses Political and security concerns are often cited as reasons not to do
business in the Philippines. Much-needed economic reforms remain
stalled, while rebel insurgencies continue in many parts of the country.
Ageing infrastructure, particularly in the power sector, is a key concern
for would-be foreign investors. Efforts to attract greater private funding
through build-operate-transfer schemes have met with only limited
success.
Opportunities The move towards outsourcing by North America and Western Europe
provides the Philippines with an opportunity to attract greater foreign
investment.
The Bangko Sentral ng Pilipinas (BSP) is endorsing legislation to
liberalise foreign bank entry. This will likely increase the number of
foreign banks in the country, which can help to service the investment
and financing interests of foreign direct investors. In turn, this will
encourage more foreign investment.
Threats China's rising economic influence presents opportunities to Philippine
firms but also threatens to starve the country of much-needed foreign
investment.
Corruption remains a problem. Transparency International ranked the
Philippines 94th out of 173 countries in its 2013 Corruption Perceptions
Index.
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& Conditions. 2013 Business Monitor International Ltd

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SWOT - Philippines - SWOT - Q4 2014

Philippines - Economy - 03 Jul 2014

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