Major US companies long ago discovered lively market
The Philippine Board of Investments will probably be glad to grab this quote from William Mitchell, president of B. F. Goodrich Company's subsidiary her: "Any Company that has any desire to be an international company would be remiss in not looking at the Philippines. It is a dynamic country. It has natural wealth, economic stability. And it has a technocratic group in government that is capable and straightforward."
It is obvious that many foreign companies agree with Mr. Mitchell. Multinationals by the hundreds are busy in this lively market of 46 million people. over 100 companies in the Fortune list of the largest 500 US industrials are investors in these islands.
Last year, the Board of Investments registered about $300 million worth of foreign investments projects. The Central Bank notched up $250 million of actual inflows for both new projects and existing companies.
Commented Minister of Industry Roberto V. Ongpin: "Considering the major problems which beset the international economy in 1979, which distracted multinationals from their normal investment activities, I believe that the foreign investment figures of the Philippines for 1979 were quite a remarkable achievement."
Mr. Ongpin was reacting to some critics minimizing this amount.
He noted that from 1970 to 1979, foreign investment totaled $1.2 billion. Of this, 51 percent came from the United States.
"I would like to point out . . . that US investments started coming into the Philippines more than 50 years ago and the recorded investment figures reflect only the original investments. thus, if they were to be adjusted for today's values, the amounts would be far larger."
Many of the American multinational that have only recently been establishing operations in other Southeast Asian countries have long been located in the Philippines, headded. Colgate Palmolive, for instance, recently celebrated its 50th anniversary in the Philippines and has been only about five years in Indonesia.
But not all is rosy in the Philippines. One problem in the Manila area is electrical brownouts. During an interview with Mr. Mitchell, the power went out and the room soon became stifingly hot.
The electrical company, Mr. Mitchell noted, hasn't been able to keep up with demand. In the Goodrich office, the lower failures disrupt electronic data processing and electric typewriters. "That is very disruptive," he complained. In the tire factory, a power break can be awkward if it comes at the wrong time in the "cure cycle." But usually the brownouts are announced in advance.
Telephone service in Manila is better than in seven or eight of 10 developing countries, Mr. Mitchell figured. But it is not ideal. Sometimes he finds it easier to phone his home office in the US than across town. One secret is to dial slowly, he says.
Mr. Mitchell recalls the days before martial law when "pickets and goons" paraded outside his office and there were bombs exploded on his plant's assembly line. He welcomes the relative peacefulness of martial law with its ban on strikes.
Foreign investment, besides bringing jobs, is especially welcome these days in the Philippines because of a huge balance of payments deficit, to a large extent prompted by rising oil costs.
The government has arranged to borrow $659 million from the International Monetary Fund over a period of two years ending Dec. 31, 1981. Investment inflows could presumbly lessen borrowing requirements.
Opposition figures criticize the Marcos government for rapidly building up the nation's foreign debt to $11 billion in recent years. With a balance-of-payments deficit last year of $570 million and one this year forecast in an IMF letter-of-intent to be $380 million, that debt continues to grow.
But G. S. Licaros, governor of the Central Bank of the Philippines, maintains that this debt is "well within our paying capability." By law, the costs of servicing the foreign debt cannot exceed 20 pecent of the foreign exchange receipts of the previous year. This year, that debt service ration is running about 18 percent, he says.
That is possible because some 82 percent of the foreign debt is fixed-term credits, mostly long-term with maturities of five years and beyond. This makes the immediate payment burden relatively comfortable.
In addition, the nation has $2.67 billion in reserves and a sound credit rating internationally, noted Mr. Licaros.
Nonetheless, Mr. Licaros does noted the importance of the Philippines reducing its need for imported oil and expanding exports rapidly.