SWOT - Philippines - SWOT - Q4 2014

1. 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 1. The executive often faces delays getting its bills through a legislature dominated
by the Philippines' old landed families, business tycoons and 'showbiz' celebrities.
2. Rumors 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 1. In his term as a 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. 2. 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 decentralize political power and
very likely improve regional governance.
3. 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 1. Kidnappings and bombings by separatist groups, such as the Abu Sayyaf and the
MNLF, are expected during our forecast period. 2. 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 1. 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. 2. 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. 3.
Weaknesses 1. 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. 2. The jobless rate will
remain high as long as economic growth falls short of the level needed to create jobs
for the fast-expanding labor force.
Opportunities 1. The government could ease pressure on its fiscal accounts by broadening the tax
base and eliminating graft at the Bureau of Internal Revenue.
2. Outsourcing could provide the
Philippines, given its low-cost English-speaking workforce, with a valuable source of
foreign exchange.
Threats 1. 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. 2. The export sector is
geared towards manufactured products, especially electronics, which are vulnerable
to a weakening of the external economic environment since late 2008.
3. Continuous maritime dispute over claims to parts
of the South China Sea raises China sanctions risk.

Business Environment
SWOT ANALYSIS
Strengths 1. 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 centers, to the Philippines. 2. 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 1. 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. 2. 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 1. The move towards outsourcing by North America and Western Europe provides
the Philippines with an opportunity to attract greater foreign investment.
2. 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 1. China's rising economic influence presents opportunities to Philippine firms but
also threatens to starve the country of much-needed foreign investment.
2.Corruption remains a problem .
Transparency International ranked the Philippines 94th out of 173 countries in its
2013 Corruption Perceptions Index.

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