Japan’s 3rd and South Korea’s 10th Global Domestic Product (GDP) ratings are secure for now. Their economic miracles in the latter part of the 20th Century were achieved through hard work of their people, opportunity afforded by free enterprise, entrepreneurial savvy of their business communities, and support of their democratic governments. Those are the exact same four pillars that are making the Philippines the nation which is going to stun the world in the next twenty years.
Coming out of COVID, when its economy shrank by 9.5 percent, the Philippines recently achieved the world’s 36th largest GDP with the nation still on the rise. With the exception of the Covid years, the economic growth rate has averaged six to seven percent since 2010. Advances in communications, technology, and transportation are allowing the Philippines to overcome past difficulties.
Being a nation composed of over 7,500 islands is not an insurmountable issue. 95% of its 110 million people reside on the eleven largest islands; 54% of the population lives in urban areas. Almost one-fourth of those, or 13.5 million people, live in the metropolis area of its capital, Manila.
For now, the country is still a debtor nation. That’s changing. In the last quarter of 2022 it was able to reduce its debt to GDP to 60.9 % from 63.7% in the previous quarter. The Philippines is also still a net importer, but that will also be shifting from primarily an agricultural to a manufacturing- and services-based economy.
Becoming the go-to country for business outsourcing from the international community is going to be significantly on the increase. China has made western businesses very uncomfortable and untrusting due to the communist nation’s international aggression. Costs of outsourcing to Japan and South Korea are forcing businesses to look for an alternative. The people of the Philippines are proving their willingness to work themselves out of depression. That’s the kind of work ethic and commitment foreign investors and businesses appreciate.
Almost half of the country’s people lived in poverty in 1985. Today it’s just over 18%. Income inequality began to decline in 2012 and has remained in a downward trajectory ever since. This still equates to 14 million families in an environment that the Filipino people continue to overcome.
With 46% of the population living in rural areas, the Philippines will be able to maintain itself as a prime exporter in the Pacific fruit market in which it already plays a significant role, and its agriculture participation will get bigger. The Philippine Rice Research Institute and the International Rice Research Institute are leading the way in enhancing crop management and new rice varieties.
Agriculture is only one sector where the rural population will be critical to the Philippines’ entry into the future top twenty global economies. Those 7,500 volcanic-formed islands hold large deposits of nickel, zinc, chromium, platinum, and palladium. Only South Africa possesses more unmined gold than the Philippines. Significantly freed from the intense historical government and business incompetence and corruption that have plagued the mining industry in the past, the four pillars described above are supporting effective extraction of the precious minerals. The Philippines has become the world’s second largest exporter of nickel.
Entrepreneurial savvy of the business community is creating a lot of opportunities in the manufacturing and services industries. Unlike when Japan and South Korea were on the rise, advanced telecommunications are no longer limited to office environments. The high concentration of cellular-phone users in the Philippines allows for immediate communications. For young entrepreneurs, their advanced communications are in their pockets as they move quickly through the streets.
This has not gone unnoticed by the government. The Entrepreneur of the Year Philippines program, which has involvements at both the governor and national president level is in its fifteenth year. In the business world, this equates to the Britain or America Has Talent programs. Beyond just enhancing its formal education programs, the Philippine government is allowing its young people to create new products and services. Working with youthful entrepreneurs, the government is serving a critical role in developing the next generation of business leaders.
One example of the entrepreneurial spirit and the next generation of business leaders is George Royeca, CEO of Angkas, a leading app-based ride-hailing service in the country with more than 30,000 bikers. In the next 10 years, he wants to create millions of jobs for over 18 million motorcycle owners in the country. He’s helping pioneer the motorcycle taxi business in his country. His company dubbed the uber for bikes will help empower citizens, who are motorcycle owners and help make them be entrepreneurs and as a result provide financial freedom for Filipinos all over the country.
Where Japan was economically in the 1960s and South Korea was in the 1980s, the Philippines is today. Difference is the Filipino people are doing it with advanced communications and in a nation rich in natural resources. Within ten years, their nation will also be in the world’s top twenty GDP ranking. The ultimate goal of the Philippine government, while on its way to becoming a world economic power, is to create a better financial environment for its citizens and develop a means for those 13.5 million families to work their way out of poverty.
