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Businessmen See Vibrant Economy

You don’t have to go to the details of the nation’s gross domestic product to find out how the economy will fare in 2019. The business plans of the tycoons and the businessmen say it all. They will tell you either in private or announce their plans in the business sections of major newspapers.


For me, this is a gauge of how the Philippine economy will expand this year. Filipino businessmen are all bullish on the economy, and I have not heard of one saying that his company is cutting down on capital expenditures this year.


Everybody, I think, is looking to expand in new areas, or find ways to increase business activities. Sound economic fundamentals, including a tame inflation rate, political stability, President Duterte’s high trust rating and a predictable investment environment are emboldening our businessmen to expand and venture into other areas.


Mr. Duterte’s massive infrastructure program and a growing population are also boosting the confidence of our businessmen. More roads, airports, bridges and seaports will offer wider market opportunities for these businessmen.


The massive capital expenditures earmarked by Philippine companies for this year is a clear indication of how vibrant the Philippine economy is. The business expansion is not limited in Metro Manila. Companies are allotting part of their spending budget to other urban centers outside the national capital region. This is the inclusive economy and gives equal job opportunities to the rest of the population.


Jollibee Foods Corp. is spending P17.2 billion in 2019, mainly for new stores, renovation of existing outlets and investments in manufacturing plants, to sustain its aggressive expansion plans.  The 2019 programmed spending is almost double the P9.6-billion actual expenditures in 2018. Jollibee’s expansion indicates strong consumer spending this year.


Major property developer Ayala Land Inc. has allotted P130 billion for capital expenditures this year, up 18.2 percent from P110 billion in 2018. The same with Megaworld Corp., which earmarked P65 billion in capital spending mainly to launch more residential, office and mall projects across its township developments and acquire more land. The upbeat mood of these two property companies suggests that their target market is growing and willing to buy more homes or rent office spaces.


PLDT Inc. is allocating at least over P58 billion for its 2019 capital expenditure mainly to finance the rollout of fiber and wireless networks. DMCI Holdings Inc., the investment company of the Consunji family, raised its capital expenditure by 14.8 percent in 2019 to P31 billion from P27 billion in 2018 to expand its real-estate, coal and power businesses.


SM Prime Holdings Inc., the property unit of the Sy family, earmarked P80 billion for the 2019 capital expenditures to support its provincial expansion and land banking activities. Holding company SM Investments Corp. allotted P98 billion for 2019 to support the expansion of its real estate, banking and retail businesses.


The bullishness of these businessmen is understandable. The Philippine economy is continuously expanding, with huge growth potential. Philippine companies registered impressive sales in 2019 because of a marked improvement in household spending.


Finance Secretary Carlos Dominguez III,   in a speech before the Japanese business community in Osaka, Japan, in February, noted that the country’s tax reforms have put more money into the pockets of the consumers and ensured strong domestic demand in the economy.


He noted, for instance, that Jollibee posted sales of about $2.9 billion in 2018, up 16 percent from the 2017 level. Its income rose17 percent to $158 million in 2018 from the previous year.


SM Prime, the owner of the biggest and most number of malls in the country, as well as the second-largest high-rise condominium developer, booked sales of almost $2 billion in 2018, up 17 percent from a year ago. Net income increased 17 percent to $616 million last year, driven mainly by new mall openings in the provinces.


The good performance of these Philippine companies in 2018 and their ambitious capital expenditures this year give me optimism that the economy will fare much better in 2019 than the 6.2-percent growth in 2018. The country’s captains of industry have already sensed this growth potential, and I couldn’t agree more.