Interview with Bobby Batungbacal, Makati Business Club (MBC)

25 Oct Interview with Bobby Batungbacal, Makati Business Club (MBC)

As one of Southeast Asia’s fastest-growing economies, can you give us your thoughts on the Philippines’ current economic status and the key sectors fueling its growth?

The Philippines is a $470 billion economy, ranking 32nd globally and fourth in Southeast Asia. Its GDP grew by 5.6% last year, outpacing other economies in southeast and northern Asia. Over the past decade, it has maintained an annual average growth rate of 4.9%. Amidst the recent pandemic, assessing growth rates over longer periods of ten years provides a clearer perspective.

Of the 16 industries, three contributed the most: wholesale and retail trade which grew at an average annual rate of 5.2%, now the largest sector; manufacturing, historically the largest, averaged 4.2% over the same period; and finance and insurance, which grew fastest at 8% annually. Other notable drivers include professional and business services, transportation, accommodation and food activities and construction. All sectors recorded positive growth rates over the last decade.

Employment reached a high of 96.9% last December, the best in two decades. Unemployment decreased from 10.3% unemployment three years ago to 3.1% at the end of last year. Underemployment remains a concern, highlighting the need and opportunities for higher-value employment.

How has Makati Business Club evolved since its inception in 1981 and what are its most recent milestones?

Since its inception, our mission at MBC has been to foster constructive dialogue. Over the years, we’ve evolved beyond discussion to proactive engagement, catalyzing reforms through policy advocacy. Our efforts span economic liberalization, including support for landmark legislation like the Public Service Act and easing capital requirements for retail trade. In a democracy, we collaborate with local government units and provide e-consultation platforms for enhanced civic engagement. Recognizing the importance of freedom of information (FOI), we advocate alongside legislative and business partners for comprehensive FOI laws, crucial for enhancing business competitiveness through informed decision-making.

On sustainability, MBC focuses on Environmental, Social and Governance aspects of businesses, producing a comprehensive report on sustainability reporting in the Philippines and training MSME representatives through our SME Sustainability Accelerator Initiative. Regarding renewable energy, MBC collaborates with private sector players and government agencies.

In digital policies, we contribute inputs from our member companies to legislative efforts such as the Internet Transaction Act, enacted in December 2023 and recent regulations finalized in May. We engage with leading technology firms like Microsoft, IBM, Oracle, NetSuite and Optum to showcase AI capabilities and their potential for enhancing business operations. In manufacturing, MBC partners with USAID and Unilab Foundation on the Advanced Manufacturing Workforce Development Alliance, aiming to enhance the skills of the workforce through integrated education and training initiatives.

During the Indo-Pacific Business Forum (IPBF), the MBC was privileged to partner with the US Embassy in the Philippines to convene a panel of industry experts on the area of supply chain resiliency for the semiconductor and electronics sector. What opportunities for investment exist for US companies in the semiconductor, electronics and critical minerals sectors?

MBC was honored to organize a panel at the IPBF, aligning well with our members’ roles in key sectors. The forum, sponsored by the United States Trade and Development Agency in collaboration with the US Embassy and the Philippine government, highlighted the Philippines’ pivotal role in the global semiconductor sector, which provides substantial high-value employment. Semiconductor assembly and testing are significant contributors, constituting about 7% of the country’s manufacturing gross value added and nearly half of its total exports. American companies have historically led investments in this sector, crucial as the supply chain evolves under the Indo-Pacific Economic Framework.

The Philippines is poised to play a crucial role in this evolving supply chain and can significantly contribute to global semiconductor electronics supply chains. The Philippines, alongside Australia and New Zealand, stands out in the Indo-Pacific Economic Framework for its supply of critical minerals. These include nickel ores, with over 50% sourced from these three countries, as well as copper, nickel, cobalt and other minerals essential for decarbonization efforts. This unique position offers American businesses an opportunity to explore, refine and integrate these materials into sustainable transportation, energy and other decarbonization initiatives. In semiconductor electronics, there’s growing interest in venturing into battery production for electric vehicles due to the Philippines’ rich nickel resources, crucial for batteries. Following Indonesia’s nickel export restrictions, the Philippines has become the largest exporter of nickel ore, presenting a significant opportunity in battery manufacturing. This aligns with renewable energy needs, where extensive battery use is anticipated.

Beyond our panel at the IPBF, there are numerous discussions on green energy and green tech in the Philippines. Opportunities abound in solar, wind, recycling and geothermal sectors. The country also holds potential in the bio-based economy, including bioplastics and bioenergy, supported by both demand and capability. It’s crucial to diversify the supply chain, ensuring every country contributes effectively. This enhances resilience, crucial during crises like pandemics or conflicts that expose vulnerabilities. Initiatives like the IPBF offer opportunities to strengthen and broaden participation in supply chains, ensuring continuity of commerce and economic stability.

MBC plays a pivotal role in promoting sustainability through innovative partnerships and initiatives. How are the sustainable initiatives promoted by the MBC impacting sustainability and contributing to environmental and urban development?

During the pandemic lockdowns in the Philippines, we launched our Business for Biking initiative to promote sustainable transportation, crucial in a time of restricted mobility. This initiative is part of our commitment to the circular economy, aiming to support Filipinos who use bicycles for commuting or livelihood. In recent years, we’ve implemented bike-friendly infrastructure across Metro Manila, including the Asphalt Art Street for bike lanes in San Juan and bike racks in Quezon City. Recently, we introduced upcycled bike racks made entirely from 100% plastic waste collected from various sources, including contributions from local government units in Muntinlupa and Las Piñas. This initiative saw MBC and partners collecting 1,700 kilos of plastic waste, transformed into functional bike racks. These upcycled bike racks were distributed to these cities and placed in 12 public schools and health centers. Through Business for Biking, we advocate cycling as a sustainable transportation choice that reduces traffic congestion, greenhouse gas emissions, promotes the circular economy and benefits public health.