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Philippines: An emerging market

Philippines: An emerging market

For ECON E-1317 by Jeewandeep Singh, James Liao, Ayesha Iqbal, Salman Ahmad, Philip Seifi

Philip Seifi

April 30, 2015
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  1. Republic of the Philippines Manila Philippine Sea South China Sea

    Sulu Sea PACIFIC OCEAN Celebes Sea 300,000 km2 73rd 100,617,630 12th GDP $7,412 118th (PPP pc) Gini 43.0 44th HDI 0.660 117th
  2. PART 1: EDUCATION From a new curriculum, to promotion of

    equal access to education by female students, the Philippine government has made great strides towards an edu- cated, globally-competitive population. Nevertheless, many educational tar- gets are far from being reached. The Philippines remain among the top ten countries with the highest out of school population, teacher absenteeism is rampant, and while almost all rich Filipinos are literate, only 86 percent of poor young women and 72 percent of poor young men have basic literacy skills. Much is left to be done to bring education in the Philippine closer to in- ternational standards.
  3. Transition to a K-12 system The new curriculum will allow

    specialization in one of sever- al streams: science & technology, music & arts, agriculture & fisheries, sports, and business & entrepreneurship.
  4. Teacher qualifications National Competency-Based Teacher Standards (NCBTS) is used as

    the basis for teacher education and development, hiring, deployment and promotion. The NCBTS considers seven domains: social regard for learn- ing, the learning environment, the diversity of learners, the curriculum, planning, assessing and reporting, community linkages, and personal and professional growth. Teachers at the preschool, primary and secondary level are required to have a bachelor’s degree in education. Teaching in colleges requires at least a Master’s degree in a particular area of specialization and a Doctorate is required to teach courses at the graduate level.
  5. Out-of-school children & youth ”The Philippines is still in the

    top ten countries with the highest out of school population ... By contrast, Indonesia managed to reduce its out-of-school population by 84 percent between 2000 and 2011.” —UNESCO — —
  6. Education inequality “In the Philippines, almost all young men and

    women from rich households have basic literacy skills, compared with 86 percent of poor young women and 72 percent of poor young men. [...] The Philippines is likely to be far from [their enrollment targets] and is in danger of going backwards.” —UNESCO — — Although enrollment levels by gender are comparable up to tertiary level, the same cannot be said for different income groups. Even worse in Muslim Mindanao, suffering from a continuing conflict, where 21% of primary school age children were out of school in 2008—more than 2× the national average of 9%.
  7. Language instruction 182 individual living languages Official languages used in

    government, education, busi- ness and media: Tagalog and English, both not spoken by most outside urban regions Learner's first language is pri- mary medium of instruction till grade three. Then, English, Tagalog being taught as a separate subject
  8. PART 2: HEALTHCARE The Philippines need to continue to focus

    on equal distribution of health care services and retaining medical professionals in order to meet devel- oped nation status.
  9. Over the last 40 years Infant mortality down by ⒠

    Communicable diseases less prevalent Life expectancy up to over 70 years BUT unequal access and outcomes between socio-economic groups
  10. Health care inequity Since 1995, national health insurance (PhilHealth) with

    increasing population coverage BUT limited breadth and depth of coverage has resulted in high levels of out of pocket payments Philippines is a major exporter of health workers, Attracting and retaining staff in under-served areas is a key challenge.
  11. Reform efforts In 2010, major effort in financing, service delivery

    and regulation to achieve ‘universal coverage’, increasing the number of poor families enrolled, reducing or eliminating copayments. BUT implementation has been challenged by the decentralized environment and large private sector
  12. PART 3: ENERGY The current energy crisis being faced by

    the country is a bulwark to- wards further development and socioeconomic expansion. The govern- ment must meet the rising consumption rate of the industrial and manu- facturing sectors, as well as of the growing population, if it hopes to suf- ficiently participate in the global economy. The energy crisis and how it is managed will be a defining step in the tra- jectory of the Philippines.
  13. Energy overview Philippines Power Crisis: power grid unable to meet

    demand, in part due to a rapid rise in manufacturing and production sectors “National capacity will double to nearly 26,000 MW by 2030, still 3,500 MW less than predicted demand.” —Department of Energy Demand primarily for diesel and gasoline (~70% of consumption), followed by electricity (~23%), and growing nearly 4% per annum.
  14. Energy challenges Increase energy capacity to meeting growing demand Establish

    and support an efficient, robust power grid Devise policy and legislation to safe-guard ‘fair use’ of the power grid Implement a market-driven environment via the 2001 Electric Power Reform Act to lower prices and foster competition
  15. The Philippines has been implementing a more robust power grid

    system that can be a reliable and regulated source of energy at affordable prices
  16. Long-term plans of increasing energy capacity via renewable sources, but

    bureaucratic inefficiencies cause delays despite interest from investors
  17. Meeting energy goals President Aquino assumed emergency powers in 2014

    to better address power shortages Invest in hydrocarbon-based and renewable energy Utilize the 2012 credit upgrade to ‘investment-grade’ to attract global investors Reduce fossil fuel dependency through initiative to convert vehicles to alternative power sources Research potential of burgeoning natural gas industry
  18. PART 4: FINANCE Philippines performance is abysmal compared to other

    Asian nations, it attracted a measly $2.8 billion in FDI, according to the Bangko Sentral ng Pilipinas (BSP) in the recent years. Comparatively, countries like China had FDI of $254 billion in 2012. Even after the President Aquino III signed a bill allowing full control of domestic lenders by foreign banks country’s banking sector remains unexplored with a huge unrealized potential.
  19. Banking sector 36 large universal and commercial, 533 rural, 71

    thrift banks; 40 credit unions, 6,267 non-banks. All banks licensed under Central Bank of Philippines Top 15 banks accounted for only 0.32% of total assets of Asia’s top 500 banks in 2012 (AB500 ranking) Universal and commercial banks continue to dominate in terms of asset size, accounting for 89.4%, while rural and cooperative banks hold 2.36%
  20. Top 10 financial companies in 2014 647 rural and co-op

    banks providing basic financial services in rural areas 73 thrift banks (savings and mortgage banks, private development banks, stock savings and loan associations, microfinance banks) engaged in trade financing and gathering deposits from small savers
  21. Total number of banks fell 89% of decrease in total

    number of banks over the past 9 years came from rural and co-op banking sector. Given that 40% live outside urban areas, domestic rural banks were expected to play a bigger role.
  22. In 2014, President Aquino signed a bill allowing full control

    of domestic lenders by foreign banks BSP has been encouraging consolidation in the banking sector to strengthen rural banks
  23. E-banking evolving to sophisticated e-money instruments (cash/remittance cards, e-wallets, etc.)

    According to 2015 estimates, mobile penetration nearing 80%, ~126MM subscribers, ⒛on 3G
  24. The future of the banking sector In a stress test

    by Asian Development Bank in 2012, the Philippine banking system showed remarkable resilience toward exo- and endogenous shocks As 2008 financial crisis didn’t have significant impact, no major reforms except Basel III framework in 2014 Moody’s expressed positive outlook because of robust economic growth and low banking sector penetration which can support credit growth. + rapid economic development; young demographic; under-banked country; governmental infrastructure spending. Their strength relative to government has downsides, but could serve well in an environment of regional integration
  25. PART 5: CRIME & CORRUPTION A deterioration of living conditions

    in urban areas has produced its share of crime, juvenile delinquency, drug addiction, prostitution, mental illness, physical disability, and suicides to name a few growing crime elements. The problem of massive poverty, exasperated by poor governance, is the primary breeding ground for crime in Philippines. Developing and maintaining safe communities is central element of good governance. An indicator of success of crime prevention programs are their perceived effects on peace and order. It is important there- fore that the government must institute strong law enforcement policies that convey public a feeling of safety in their community where they can walk the streets anytime of the day, enjoy their family and social environment, and partici- pate in community activities without fear for their life and property.
  26. GO PHILIPPINES! Real GDP Growth (14-18) Challenges Required policy changes

    5.8% Poverty Human capital development Governance ɾ Create more jobs for sustainable poverty reduc- tion ɾ Build holistic disaster risk reduction and man- agement capacities to reduce vulnerability to nat- ural hazards ɾ Improve agricultural productivity and transport infrastructure in Mindanao Year to reach high-income country status (best scenario)
  27. SOURCES EDUCATION: National Statistics Office http://www.gov.ph/2013/05/15/republic-act-no-10533/ http://www.deped.gov.ph/press-releases/%E2%80%8Bover-5800-public-schools-set-offer-senior-hs-2016 http://www.ibe.unesco.org/fileadmin/user_upload/Publications/WDE/2010/pdf-versions/Philippines.pdf http://www.uis.unesco.org/DataCentre/Pages/country-profile.aspx?code=PHL&regioncode=40515 http://www.philstar.com/headlines/2014/01/23/1282186/philippines-education-crisis-far-over-unesco

    ENERGY: Gonzales, Iris. "Power Crisis Looms in 2015." Philstar.com. N.p., 22 July 2014. Web. Manabat, Robert. The Energy Report Philippines. Publication. N.p.: KPMG Global Energy Institute, n.d. Web. <http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Documents/energy-report- philippines.pdf>. Moss, Trefor. "Philippines Power Crisis: The Battle to Keep the Lights On." WSJ.com. Wall Street Journal, 17 Sept. 2014. Web. Philippines Executive Summary 2012-2030. Rep. US Department of Energy, n.d. Web. <http://www.doe .gov.ph/doe_files/pdf/01_Energy_Situationer/2012-2030-PEP-Executive-Summary_revised.pdf>. Trivedi, Anjani. "No End in Sight to the Energy Crisis That Plagues the Philippines." World No End in Sight to the Energy Crisis That Plagues the Philippines Comments. Time, 6 Aug. 2013. Web. "U.S. Energy Information Administration - EIA - Independent Statistics and Analysis." U.S. Energy Information Administration (EIA). N.p., n.d. Web. FINANCE: http://www.mckinsey.com/insights/telecommunications/capturing_the_promise_of_mobile_banking_in_emerging_markets OTHER: http://www.globalintelligence.com/insights/all/8-success-factors-in-emerging-markets-opportunity-analysis-for-south-east-asia