Investments Media News Analysis

Investment advice: ignore the doomsayers

Investors, take note! Contrary to much of what’s been described in the foreign media, the Philippines is a sound funds destination for overseas companies wanting to expand their manufacturing bases and the reach of their brands. In fact, judging from the amount of trade missions descending on the archipelago over the past few months – that’s since President Rodrigo Duterte took office – right now, the Philippines looks like the Southeast Asian market-of-choice for new money. There’s certainly a lot of interest.

From Mexico to the Netherlands, Scandinavia to the Middle East, the businessmen – many accompanying diplomatic missions – have been pouring in. These aren’t hot money, now-you-see-us-now-you-don’t speculators; these are solid companies and corporate groups that are looking to make long-term commitments. They want to set up in the Philippines, and whether its agriculture or education or energy, or anything else, they’re seeking long-term involvement.

What’s so striking, however, is the huge variance in the analysis of the country’s economy and its outlook between that bleeding from the pages of mainstream media – the New York Times, the Guardian,  the Washington Post, The Economist; too many to list – and that coming from businessmen regularly exploring the market on the ground.

It seems odd that media hacks who are never going to invest a stiver or a red cent in the archipelago can’t issue enough warnings to ensure no one else does either, while businessmen are tramping the length and breadth of the country looking for investment opportunities. What do the media oracles see about the Philippines from their gilded eyries in New York and London that the investors don’t see on their road trips, their company visits, and from their discussions with potential Filipino partners and Philippine Government ministries?

It’s quite bizarre. On the one hand, CNN reports “fears are growing that [Duterte] could destabilise the economy … concerns that Duterte’s volatile rhetoric and unpredictable policy moves are driving investors away”. On the other, Marten Van Der Berg, Director-General for Foreign Economic Relations at the Dutch Foreign Ministry on his return last week from a trade mission to Manila says: “What I will tell the Dutch companies is please go to the Philippines, see the opportunities …We’re very happy to facilitate the trade, investment opportunities”.

When it comes to the Philippines, the Dutch have no problem putting their money where their mouth is. The Netherlands is the biggest foreign player by far. Last year, approved investments from Holland were upwards of PHP80 billion – greater than Japan, around PHP55 billion, South Korea, around PHP25 billion, and four times what the US stuck in.

But the above example is a typical juxtaposition. Here’s another; a headline from Yahoo News: “Philippines’ Duterte pivots to China, Russia as investors leave”. We think what they actually meant to say was “Investors leave as Philippines’ Duterte pivots to China, Russia” – English syntax is not exactly Yahoo News’s field. But then nor is business analysis.

That story was put out in September, the same month that the UK’s Prime Ministerial Trade Envoy to the Asean Economic Community, Richard Graham, was leading a British trade delegation to the Philippines. This is what he had to say.

“[The Philippines] is a good place to do business … I see not just big UK companies like Shell and GlaxoSmithKline investing more here, but smaller ones … There are good opportunities for niche British SMEs [small and medium enterprises] to manufacture either alone of in partnership … They will definitely be encouraged by the sort of messages which the [Duterte] government is putting out … Opening up the doors to foreign investment is a clear goal of this government and I support that”.

Graham, who is also the UK’s Prime Ministerial Trade Envoy to the Philippines, spent two years based in the country in the 1980s as the general manager of Hong Kong flag carrier, Cathay Pacific – so he’s likely to have a better grasp of the place than a blogger for the Huffington Post who’s never been further east than Hicksville on New York’s Long Island.

It’s as if the media and the investors are talking about two completely different places. They are literally poles apart – negative and positive, where the former defines the press view from afar and the latter defines the business view from up-close. But that’s the pattern.

Of course, large elements of the mainstream media are not looking out for investor interests – they find the idea of businessmen seeking to make more money from their existing money as decidedly distasteful; that’s the capitalist system they despise. In the case of the Philippines, however, there’s something they despise more – a president who won’t do what their Western masters want. So they’ll deter anyone from putting money there while he’s there.

Yes, there are volatilities in the Philippines right now – the new government has embarked on a revolutionary economic agenda that has ruffled a lot of feathers domestically. It’s also switched to a pro-China trade policy that turns its US-dominant predecessor on its ear. There’s also the war on drugs which is expensive to put it mildly. But the media message is not about the costs of fighting that war; it’s about a society that’s careering towards the cliff in a blood storm. Any investor reading that narrative is going to have second thoughts; and that’s the intention. But let’s get some proportion here; let’s look at a few figures.

To date the official death toll from the president’s war on drugs – the media’s whipping post for Duterte – stands at around 2,300. For the hacks, it’s a carnage that resembles the Kampuchean killing fields of Pol Pot. But in the US last year, murder and manslaughter claimed 15,696 lives, and in the first half of this year the murder rate in 51 cities is already up by 15%. So why aren’t investors being told to avoid the US? It’s obviously far more dangerous. Well, Washington’s propagandists – and that’s what they are; they’re not analysts in any sense – self-censor inconvenient truths such as that. Washington wants investors to come in so the media certainly aren’t going to discourage them.

The point of all this is simple: the last thing that potential investors wanting to assess the Philippines’ risk-reward ratio should do, is pay any attention to anything put out on the subject by the mainstream media. We’d recommend reading the entrails of a goat first. It can’t be more inaccurate.

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