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Philippines Summit 2016 Surging ahead? November 10th 2016 • Manila Once South-East Asia’s chronic underachiever, the Philippines has emerged as a darling of emerging market investors. Rodrigo Duterte’s victory in May’s Presidential election suggests the Filipino people are less optimistic. Mr Duterte succeeds Benigno Aquino, whose pro-business policies encouraged foreign investment, boosted spending on infrastructure and encouraged consumption. Mr Duterte, who ran a populist campaign focused on domestic issues, seems keen to pacify nervous investors and says growth will be his priority too. And though the Philippines will be buffeted by regional and global economic headwinds, the IMF expects it to post growth rates of above 6% in 2016. Closer economic integration with its South-East Asian neighbours should see the Philippines economic fortunes rise even further in years to come. Yet as Mr Duterte’s rhetoric suggests, the story for Filipino people is more mixed. Widespread poverty remains a real problem. Unemployment is stubbornly high, and both health-care spending and the disposable incomes of the poor lag behind what is now seen in the Philippines’ neighbours. Yet these problems also present opportunities. The country’s population of 100 million is growing. There is abundant room for privateand public-sector innovation in health care, education, infrastructure, and consumer products. Now is the time for the Philippines to take advantage of its demographic dividend. The Philippines faces internal and external security headaches that show little sign of abating. Despite peace deals, violence remains depressingly present in the restive southern provinces, and the country is caught in an increasingly ominous game of geopolitical chess in the South China Sea. Its relationship with the United States, a treaty partner, remains strong. Yet the Philippines must delicately balance this relationship against ties with its ASEAN neighbours and other trading partners—including China. Long overlooked in favour of the “tiger” economies to its north and south, the Philippines has the opportunity to finally emerge as a South-East Asian powerhouse. Its challenge is to live up to this potential. The Philippines Summit 2016 will bring together leading voices from government, business and finance, civil society and academia for a forthright discussion about the opportunities and challenges facing the country. Under Mr Duterte, will 2017 be the year the Philippines surges ahead? Conference chairman Jon Fasman, South-East Asia bureau chief, The Economist Moderators Charles Goddard, editorial director, Asia-Pacific, The Economist Intelligence Unit © 2016 The Economist Events This is a confidential draft programme for the conference mentioned in this document. All topics and speakers are indicative and subject to change. 1 DRAFT PROGRAMME 8.00am Registration and networking refreshments 9.00am Chairman’s opening remarks 9.30am Keynote interview: Policy priorities in the year ahead 10.00am Keynote panel: The Philippines’ economy—full speed ahead? Under former president Benigno Aquino, the Philippines enjoyed consistent GDP growth rates of over 6%. Boosted by remittances, public spending, the growth of the business-process outsourcing industry and greater regional integration (primarily through the formation of the ASEAN Economic Community or AEC), the country enjoyed healthy foreign investment flows. New President Rodrigo Duterte takes control of the country at a time when the global economy is far less robust. China’s growth is slowing, Europe’s economic malaise continues unabated and the fledgling AEC is experiencing (not wholly unexpected) teething problems,. Could weaker global demand lead to stuttering prospects for the Philippines? Or can strong domestic consumption and cheaper oil continue to prop up the economy? 10.45am What policies is the new government putting in place to help foster GDP growth? How has the shift to a new administration affected investor sentiment? What will slowing global growth and the structural changes in China’s economy mean for the Philippines? Is the country adequately prepared to take advantage of opportunities that may arise? How can the Philippines harness the benefits of greater economic cooperation through initiatives such as the AEC and Trans-Pacific Partnership (TPP)? Spotlight interview: Going global We invite a significant business leader to take part in a one-on-one interview. They will give their views on how Filipino companies have successfully expanded beyond their borders and why this trend must continue in order to boost growth back home. 11.15am Networking break © 2016 The Economist Events This is a confidential draft programme for the conference mentioned in this document. All topics and speakers are indicative and subject to change. 2 11.45am Strategy session: It’s a consumer’s world (concurrent) The global tech boom is coinciding with an explosion in the Philippines’ middle class, which has led to the birth of an innovative and exciting consumer market. What will the key growth areas be in 2017? What are the pitfalls to avoid? Which companies are leading the pack—and which are falling behind? Strategy session: The future of manufacturing (concurrent) With a young population and relatively low wages, the Philippines is well placed to become a manufacturing powerhouse. But techdriven innovations such as automation, digitisation and artificial intelligence are radically reshaping the manufacturing sector around the world. The factories of the future won’t much resemble the labour-intensive plants of the past, meaning that new manufacturing capacity is unlikely to drive mass employment. Is the Philippines ready for this shift? What will it take to put the country at the head of the tech-focused manufacturing revolution? And what will this mean for the country’s workforce? Strategy session: Countering climate change (concurrent) A typhoon rages through the Philippines, destroying farmland, water sources and infrastructure, and wreaking havoc on the lives of people across the archipelago. Sadly, this tale is not an unfamiliar one. As one of the countries most vulnerable to weather disasters, the Philippines counts climate change and its effects as part of everyday life. Signing the agreement reached at COP21 was an important step towards managing and mitigating the effects of climate change. What other measures must be taken? How can the Philippines play a global leadership role on climate change? What part must the private sector and the investment community play? 12.30pm Networking lunch 1.45pm Panel discussion: Philippines Inc.—More than just a call centre Seldom has any country been so transformed by one industry as the Philippines has by call centres. The first business-process outsourcing jobs appeared in the 1990s, and the industry now employs some 1.2m people and accounts for about 8% of the Philippines’ GDP. Many are drawn to the offer of attractive wages and better lifestyles, leaving skill-intensive, lower-paid jobs to man customer-complaint hotlines. © 2016 The Economist Events This is a confidential draft programme for the conference mentioned in this document. All topics and speakers are indicative and subject to change. 3 For the Philippines to thrive and for its industry to mature, it must diversify. Call centres may soon become obsolete as technology develops and automation takes over repetitive tasks and requests. In its Investment Priorities Plan, the Aquino government identified key industries for development, including manufacturing, agribusiness and infrastructure. But is enough being done to diversify the Philippines’ business environment? How will industrial policy differ under President Duterte’s leadership? What needs to happen to hasten the Philippines’ industrial diversification? Can other industries compete with call centres for top talent? Do small and medium-sized enterprises have the right supports in place? What are the main reforms that business would like to see? to grow? Panellist Noemi Azura, president and chief executive officer, PhilCare 2.30pm The World If… Trouble on the South China Sea China fires missiles sinking several Filipino navy ships patrolling the South China Sea. Its message is clear: the disputed islets belong to China, and Philippines–US cooperation will not intimidate Beijing. The new government faces a critical decision: whether to call on its allies and stand up against China’s military might, or to accept defeat. This session brings together geopolitical analysts and experts for a frank discussion considering the prospect of worsening ties with China amid ongoing territorial disputes in the South China Sea. How should the Philippines react to such a scenario? What are the greatest risks it might face? Panellists Bill Hayton, author, South China Sea: the struggle for power in Asia Aileen Baveria, professor, University of the Philippines 2.55pm Panel discussion: Inclusive growth An era of political stability and sustained economic growth has led to good times in the Philippines. Big business has prospered, and the middle class is larger and wealthier than before. But the benefits of growth are not trickling down. According to a 2015 survey by the Philippines Statistics Authority, over 25% of Filipinos live below the poverty line. That number has changed little despite years © 2016 The Economist Events This is a confidential draft programme for the conference mentioned in this document. All topics and speakers are indicative and subject to change. 4 of prosperity; the country has missed its commitment to the UN’s Millennium Development Goals of halving poverty by 2015—and by a long way. What is being done to tackle the Philippines’ severe poverty problem? Will the President Duterte make poverty a priority? What role can legislation play in employing the masses and lifting millions of Filipinos out of poverty? What role can technology and the internet access play in inclusive growth? Panellists Tomoko Nishimoto, assistant director-general and regional director for Asia and the Pacific, International Labour Organisation (ILO) Gerardo Ablaza, president and chief executive officer, Manila Water Jan Rutkowski, lead economist, human development economics, Europe and Central Asia region, World Bank 3.40pm Networking break 4.10pm Panel discussion: Get moving—Investing in infrastructure The domestic auto industry is celebrating: between 2013 and 2015, car sales in the Philippines jumped 91%. This incredible statistic not only reflects growth in the middle class, but may also explain why traffic is such a problem. Motorways routinely become car parks during rush hour. The public rail system, which if better developed may ease road congestion, suffers from delays and a lack of investment. Projects have moved too slowly, encountered roadblocks or suffered because of policy U-turns. As more people move to cities, the strain on urban transport systems will only grow. But infrastructure needs in the Philippines stretch beyond transport. As the size and sophistication of industry increases and the population grows, the country’s energy demands are on the rise. Frequent power outages make doing business challenging, and a coal-heavy energy plan is unsustainable if the country is going to meet its commitment to tackling climate change. At the top, public spending on infrastructure has been notoriously inadequate. The Aquino administration’s attempts to spur investment through the public-private partnership (PPP) programme have been a bright spot, but much more action is needed to help transform the country’s infrastructure—which could create a better business environment and stronger long-term growth. How does regulation need to change to speed up and © 2016 The Economist Events This is a confidential draft programme for the conference mentioned in this document. All topics and speakers are indicative and subject to change. 5 improve infrastructure development? What must happen to improve transportation systems and ease congestion? What strategies and initiatives can help meet the country’s growing energy and power needs? How can the Philippines foster improvements in communications infrastructure to help its tech sector prosper? 4.55pm Keynote interview 5.25pm Wrap-up and review Join the conference moderators in this interactive wrap-up of key points from the day. Tweet your takeaways or share them in person. 5.45pm Conference close © 2016 The Economist Events This is a confidential draft programme for the conference mentioned in this document. All topics and speakers are indicative and subject to change. 6