German Firms Remain Keen on PH Market

The interest of German companies in the Philippines remains high, although firms are on the lookout for the “clouds” in the local market.

German-Philippine Chamber of Commerce and Industry (GPCCI) Executive Director Martin Henkelmann told the Philippine News Agency (PNA) that German firms see great potential for trade and investments in the country.

Henkelmann said German companies are keen on investing, particularly in the sectors of business process outsourcing (BPO), infrastructure and energy, as well as bringing in high-end machinery and exporting Philippine food products.

“The Philippines is a very interesting region as well for German companies. There’s great potential for both direction, and we have seen that the Philippine products are actually competitive in the German market,” he said.

He noted that the Philippines’ strong BPO industry is the main driver for German companies to outsource services here to cater to these firms’ English-speaking clients.

The government’s “Build, Build, Build” program also attracts German firms in the engineering and construction sector to explore investment opportunities here, the GPCCI executive said.

In the energy sector, Henkelmann mentioned that there will be a German business delegation coming to the Philippines next month to look for possible local partners.

“There’s a lot of sunshine but there’s a cloud for us on our side,” Henkelmann noted.

“We are a little bit worried about the TRAIN 2 law,” he said, pertaining to the second package of the Tax Reform for Acceleration and Inclusion (TRAIN) of the administration, which targets to rationalize fiscal incentives.

“This will reduce the advantages in the PEZA (Philippine Economic Zone Authority) zones. They might see some problems on this side,” he added.

Henkelmann said German companies want clear policies on the rationalization of tax perks given by the government, so that firms, especially in the export manufacturing, can decide whether to pursue their investment plans in the Philippines or not.

“And we’re a little bit afraid that if we don’t see this in 2019, because investments, which will be done in 2019, had been decided before where people were normally discussing too much the problems of PEZA,” Henkelmann said.

During the GPCCI’s economic outlook for the Philippines last week, Deutsche Regis Partners, Inc. chief strategist and co-head of research Rafael Garchitorena said there are positive developments in the local market for 2019, which he called “a break in the clouds” from last year.

“Last year is a bit of rough year for the markets,” Garchitorena said. “We hope that not all of a sudden this will be a deja vu.”

“We are granted a lot of macro fundamental reasons to be positive for 2019,” he added, citing the market’s bullishness reflected in the local currency and the stock market.

He said the Philippine Stock Exchange (PSE) is off to a running start this year, with the index improving by 7 percent in the first two weeks of the year and up by 17 percent from its November low.

In fact, PSE index closed last week in the 8,000-level.

He also said that the Philippine peso made a rebound from the bottom, after bouncing back by 4 percent from a low of PHP54.35 to a dollar, now placing in the middle of the pack among major currencies in Asia.

“We think there’s a continued rally in the economy even up to the second quarter of 2019,” Garchitorena added.

He, however, noted that “clouds are still there” for the Philippine economy. He pointed out that the country’s “twin deficit” — in fiscal and current account — is a concern for the economy’s long term growth. (PNA)