February 2015
The Philippines Millennials
Roberto B. Tan
Treasurer of the Philippines
Understanding the “Global” ASEAN Consumer
2
ASEAN Offers a Future of Prosperity and Stability
Combined GDP of nearly USD3tr
Over 600mn consumers
Robust growth outlook
2015 2016
ASEAN 5 5.2 5.3
World 3.5 3.7
Advanced Economies 2.4 2.4
United States 3.6 3.3
Euro Area 1.2 1.4
Emerging Markets 6.4 6.2
China 6.8 6.3
Emerging Europe 2.9 3.1
Latin America 1.3 2.3
Source: International Monetary Fund
Collectively, ASEAN’s combined GDP places 7th worldwide – with slightly
higher national income than Brazil
% Share to Global GDP (2013)
United States 21.8
China 11.6
Japan 8.3
Germany 4.7
France 3.6
United Kingdom 3.4
ASEAN 3.1
Brazil 3.1
Source: ASEAN
3
ASEAN: Consumer Profile
ASEAN 5 2008 2010 2012 2014
GDP per capita (PPP, current)
US$7,526 US$8,163 US$9,187 US$10,166 Global brands are here:
Sources: McKinsey, International Monetary Fund, Nielsen
Rapidly declining extreme poverty (% of total population): 2000: 14% vs. 2013:
3%
By 2025, consuming class will expand to 125mn households
Broad consumer trends: leisure activities, modern retail, increasing brand
awareness
22% of ASEAN’s population live in cities of more than 200,000 inhabitants Urban areas account for more than 54% of the region’s GDP
Home to 3 of the World’s Most Confident Consumers in the World
Increasingly moving online
Mobile penetration of 110% & Internet penetration of 25%
Make up the world’s second-largest community of Facebook users
4
PH: Strongly Positioned for the ASEAN Economic Community
Sources: International Monetary Fund, Philippine Statistics Authority
Real GDP Growth (%)
5.4 5.0 4.9
5.5
7.2
5.3
4.1 3.6
5.0
7.4 6.9
5.8 5.9
7.2
4.7
5.8 5.7
4.5 5.0
6.0
7.8 7.3
5.3
6.1
2.0 2.8
4.5
6.3
1980-89 1990-99 2000-09 2010-14
ASEAN 5 Thailand Vietnam Malaysia Indonesia Singapore Philippines
2.8
4.5
6.3
1990-99 2000-09 2010-14
Consumption Investment Government Net Exports
2.8
4.5
6.3
1990-99 2000-09 2010-14Agriculture Industry Services
Average Contribution to Broad-Based PH Growth (%)
5
Sustained Growth Translates to More Jobs and Higher Incomes
Indicator Ave 2010 Ave 2011 Ave
2012 Ave 2013 Ave 2014* Oct 2013** Oct 2014**
Labor force (‘000) 38,893 40,006 40,426 41,022 40,051 40,397 41,322
Employed (‘000) 36,035 37,192 37,600 38,118 37,309 37,793 38,839
Wage and salary workers (% share to total employment)
54.5 55.2 57.2 58.4 57.9 57.7 58.1
Unemployment rate (%) 7.3 7.0 7.0 7.1 6.8 6.4 6.0
Source: Labor Force Survey, Philippine Statistics Authority
*The average estimates for 2014 exclude Region 8. Moreover, average estimates for wage and salary workers are computed using the January 2014 data (which exclude Region 8) and
April-October 2014 (which exclude Leyte).
**Due to T phoo Yola da’s devastatio , esti ates for O t. e lude Le te; for o para ilit purposes, O t. esti ates also exclude Leyte.
4.3
2.7
6.6 7.3
5.3
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2006-10 average 2011 2012 2013 2014
GNI per capita (PPP basis) (LHS) GDP per capita (PPP basis) (LHS) GNI per capita growth (labeled, %, RHS)
GDP Per Capita (US$)
6
PH in 2015: Entry Into the ‘Demographic Window’ – Opens Opportunities for Sustainable Growth
Source: UN World Population to 2300, UN World Population Prospects, IMF World Economic Outlook
2015
2010
2010
2005
2005
1995
1990
1985
1980
1980
1965
2050
2050
2045
2040
2040
2030
2025
2020
2015
2015
1995
1950 1970 1990 2010 2030 2050 2070
Philippines
India
Malaysia
Vietnam
Indonesia
Thailand
China
Korea
Singapore
Hong Kong
Japan
Demographic Windows in Asia
Average GDP Growth Rate for First 10 Years in Demographic Window (%)
For nations that have not yet been in their demographic windows for 10 years, the figure is an average of their growth rate for the time in the window
Has been in the demographic window for at least 10 years
Has been in the demographic window for less than 10 years
10.3 9.0
8.1 7.8 7.4 6.5 6.2 5.8 5.8
3.3
China Korea Japan Singapore Hong Kong India Vietnam Indonesia Malaysia Thailand
7
Population
100mn Internet Penetration
37% Mobile Penetration
105%
81% are active Facebook users
32% are on Twitter
51% are active YouTube users
PH Consumers: Tech Savvy and Social Media Oriented
Average Daily Time Spent Accessing the
Internet
6 hours
through
Desktop/Laptop 4 hours
through
Mobile
Devices
Philippines Digital Landscape
Social network sites viewed 15 billion
times
45% go online every week
65% interact with brands via social
media
Source: Global Web Index, Nielsen Survey, Ihub Media, International Telecommunications Union
3rd Most Confident Consumers in the
World
8
PH Fiscal Flexibility: Sufficient Fiscal Space for Investing in Human Capital
Source: Department of Finance
Fiscal Deficit/GDP (%)
General Government Debt/GDP (%)
0.2
0.9
3.7 3.5
2.0 2.3
1.4
0.3
2007 2008 2009 2010 2011 2012 2013 Jan-Sep2014
44.2 44.2 44.3 43.5
41.4 40.6
39.2
37.3
2007 2008 2009 2010 2011 2012 2013 Jan-Jun 2014
9 Source: Department of Budget and Management
Stronger Fiscal Finances and Well-Targeted Spending Allow Higher Investments in Social Services
23.4 31.0
40.5 52.4 56.9
90.5 94.6
2009 2010 2011 2012 2013 2014 2015
205% g.r.
from 2010-2015
Health Budget (PHP bn)
208.7 225.1 254.4
279.4 327.0
383.1
450.2
2009 2010 2011 2012 2013 2014 2015
Education Budget (PHP bn)
100% g.r.
from 2010-2015
Investing in People
Improving health access and quality
Sin Tax Reform Law (RA 10351)
Responsible Parenthood and Reproductive
Health Act of 2012 (RA 10354)
Strengthening access to education and
training for life skills
Kindergarten Act of 2012 (RA 10157)
Enhanced Basic Education Act of 2013
(RA 10533)
Act Strengthening the Ladderized Interface
Between Technical-Vocation Education and
Training and Higher Education (RA 10647)
PHP2bn budget for Technical Education and
Skills Development Authority (TESDA)
Expansion of social protection
Conditional Cash Transfers (CCTs)
National Health Insurance Program
10
Stronger Fiscal Finances Allow PH to Accelerate Infrastructure Development
Key Budgetary Sectors as percent of GDP
Source: Department of Budget and Management
Infrastructure Outlay (as percent of GDP)
2.2%
2.5%
3.5%
4.0%
5.1%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
2012 2013 2014 2015(Projected)
2016(Projected)
11
Investment Opportunities in PH
Manufacturing Tourism
Agri-business
Infrastructure
Investment Opportunities
IT and BPO
PH MY ID TH SG VN
2012 60.2r/ -35.6 3.1 177.1 1.2 12.6
2013 2014 Q1 -Q3
13.9r/ 61.3
18.9 -2.3
10.1 6.2
19.7 58.2
5.3 35.6
6.4 NA
Growth in Net FDI among fastest in Region
12
Growth Outlook for 2015 and 2016
Source: Department of Budget and Management, National Economic and Development Authority, IMF’s World Economic Outlook Update (Jan 2015); WB’s Global Economic Prospects (Jan 2015)
2015 (projected)
2016 (projected)
NEDA Board-Development Budget Coordination Committee (as of Jan. 7, 2015)
GDP growth (%) 7.0-8.0 7.0-8.0
IMF Forecast 6.6 6.4
WB Forecast 6.5 6.5
Inflation, CPI (%, 2006=100), average
2.0-4.0 2.0-4.0
Exchange rate (PHP/US%)
42-45 42-45
Budget deficit (% GDP)
-2.0 -2.0
Philippine Development Plan Update (as of Jan. 2014)
Unemployment rate (%)
6.7 6.6
Underemployment rate (%)
18.0 17.0
Poverty incidence (%)
22.5 19.0
Drivers of growth in the near to
medium term
Supply side
Manufacturing
Construction and logistics
International and domestic tourism
Wholesale and retail trade
Business Process Management (BPM)
fueling growth in real estate
Agribusiness
Demand side
Investment: public construction, including
infrastructure and reconstruction; private
construction
Household consumption: remittance
inflows, strong consumer confidence
Exports of services: good prospects on BPM
External trade conditions: low world price
of oil
February 2015
The Philippines Millennials
Roberto B. Tan
Treasurer of the Philippines
Understanding the “Global” ASEAN Consumer