UAE-Philippines trade ties on solid growth trajectory

Inayat-ur-Rahman

The UAE-Philippines trade ties are on solid growth track and are marching ahead. In 2017, the UAE became the Philippines’ largest trading partner in the Middle East, deepening ties that were established in 1980. At $1.49 billion (Dhs5.47 billion), the UAE-Philippine trade accounted for 31 per cent of the regional trade valued at $4.81 billion. That trend has continued until now. “Since 2016, bilateral trade has steadily increased. In 2016, bilateral trade was $893.11 million. This increased to $1.95 billion by 2018.

Today not only does bilateral trade make up 31.9 per cent of the Philippines’ total trade with the Middle East, which stands at $6.12 billion, but the UAE is also the Philippines’ 16th-largest trading partner in the world, 15th-largest import supplier, and 20th-largest export market, according to the Philippine Trade and Investment Centre (PTIC) based in Dubai.

Philippines continues to be on the global investors radar due to political , economic stability and confidence in growth outlook. Demographics, productive labour force, solid macro fundamentals and technology focused government have brought investors back into the market. Government is maintaining strong liaison with local investors to provide solid framework to execute their business with ease. Demographics of 107.4 million, geographical significance and economic confidence has given strategic advantage to the country. According to the latest report July 2019 from McKinsey. By 2050, Asia will contribute 50% of the global consumption. This is colossal, meaning other 4 continents will be competing with Asia. The game has moved to Asia. 500 years ago, trade moved from Mediterranean to Atlantic. Now, the pivot has moved to Asia. Asia is the future growth engine of the global economy.

Philippines is one of the emerging markets Asian tiger economies along with Vietnam, Malaysia, Indonesia and Thailand.

In an exclusive interview with Gulf Today IQI Global Chief Economist Shan Saeed shared his thoughts while speaking at Philippines Economic outlook Forum 2019. Shan Saeed is perhaps the most after maven for his insights on global and regional economies. Speaking at the forum he said that peso has appreciated 5% against US dollar  in 2019.

Peso performance in the last 3 years against US dollar. In 2017——49.75, 2018——55.87 and in 2019——52.50.

Investors favor political strongmen who like orthodox economies. The Philippines economic growth for this year stands between 6.1 and 6.3%. Inflation to remain subdued under 2.8%. Government is totally committed to build infrastructure and to initiate structural reforms in the country. He added that infrastructure investment has direct correlation with GDP Growth. One of the professors at University of Chicago, Booth School of Business, USA: Nobel Laureate late Robert Fogel wrote a paper in 1964 emphasizing about infrastructure investment strategy. Energy market is getting lot of attention in the ASEAN region and Philippines could be possible LNG hub along with Malaysia and Indonesia.

Real estate has picked up in the last 2 years. Major global investors who are investing in Philippines real estate market are Koreans, Japanese,  Malaysian, Americans, British and  Chinese.

With strong economic growth, an expanding population and an increasingly sophisticated internal market, the Philippines is one of Asia Pacific’s brightest investment opportunities. Concerted efforts to reform taxes, improve the ease of doing business and shore up capital markets are under way, while inflation is back under control and a major programme of infrastructure development is accelerating. Meanwhile, structural reforms are continuing and significant shifts are being undertaken in key areas such as fuel subsidies and rice imports. Additionally, more sectors of the economy are being opened up to foreign participation as the country moves towards greater integration with its international partners. All these moves are helping the Philippines move up the value chain, diversify its economy and attract greater foreign direct investment.

Philippines is an important player in Belt and Road equation which will help bolster the economic growth in the country. BRI is the only winning infrastructure investment strategy that can spur growth globally. Technology is another area that would buttress many economies. AI has moved from niche to mainstream market. Growth of Al in 2017 was mere $16 billion and by 2025 would touch $190 billion. Simple mathematics, CAGR of 36%. Technology, economic confidence, infrastructure, young labor force and above all strong manufacturing base would drive growth in the next 25-30 years.