AHK WBO Philippines Results Spring 2023

The Philippines

AHK World Business Outlook Survey Results Spring 2023

Summary – Spring 2023

Top 3 Risks

Overall, businesses engaged in German-Philippine economic relations express significant optimism regarding their local business prospects. However, they also identify certain risks, such as shortages of skilled labor, disruptions in supply chains, and economic policy uncertainties. Additionally, these companies anticipate an increase in geopolitical obstacles, such as inflation, trade barriers, and cybersecurity threats, over the next five years.

62%

Situation

74%

Expectations Economy Investment* Employment Better / Higher

35%

26% 0%

54% 46%

43% 38%

50% About Equal

3%

16% 10% 44%

Worse / Lower

3%

6%

44%

Lack of Skilled Workers

39%

Supply chain disruptions (e.g. logistics, missing intermediate goods)

35%

Economic Policy Conditions

Top 3 Geopolitical Challenges

47%

Inflation / Monetary Policy Environment

Increase of political influence on supply chains (e.g., through legislation, trade barriers) Cybersecurity

42%

37%

No Investment*

71%

61% 50%

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AHK World Business Outlook Survey

2

How do you assess the current situation of your company?

62%

Spring 2023

35%

3%

Better

About Equal Worse

53%

Fall 2022

47%

Spring 2022

Fall 2021

Spring 2021

41%

43%

32%

21%

6%

47%

50%

10%

20%

29%

62% of the

respondents are in a better business situation with a significantly improving trend.

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AHK World Business Outlook Survey

3

What business development does your company expect in the next twelve months?

74%

Spring 2023

26%

0%

Better

About Equal Worse

61%

Fall 2022

26%

13%

Spring 2022

55%

44%

1%

Fall 2021

57%

40%

3%

Spring 2021

29%

62%

9%

74% of participating

firms forecast optimism in business development for the next twelve months, with notable 0% in worse ratings

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AHK World Business Outlook Survey

4

How do you judge local economic development in the next twelve months?

54%

Spring 2023

43%

3%

Better

About Equal Worse

34%

Fall 2022

41%

Spring 2022

Fall 2021

Spring 2021

39%

51%

24%

15%

27%

8%

54%

45%

12%

40%

54%

of participating

companies forecast a better development on local economy in the next twelve months with a drastic decrease (-24%) in "worse" ratings from Fall 2022

Spring 2023

AHK World Business Outlook Survey

5

How do you think local investments of your company are likely to develop in the next twelve months?

46%

Spring 2023

38%

6% 10%

Higher About Equal Lower

35%

Fall 2022

44%

Spring 2022

Fall 2021

Spring 2021

44%

39%

26%

14%

15%

No Investment

14% 3%

43%

42%

6%

24%

29%

7%

15%

46%

of participating

companies are plan to invest higher in the country in the next 12 months

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AHK World Business Outlook Survey

6

How do think local employment of your company is likely to develop in the next twelve months?

50%

Spring 2023

44%

6%

Higher

About Equal Lower

Fall 2022

44%

50%

6%

Spring 2022

46%

48%

6%

34%

Fall 2021

Spring 2021

15%

51%

56%

15%

29%

50%

of survey

participants said that they will hire more in the next 12 months

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ASEAN Comparison: Overview

Vietnam

54%

Singapore

49%

Expectations

Indonesia

33% 74%

50%

8% 7% 20% 26% 0%

42%

68% 51%

8% 27%

35%

70% 47%

4%

53%

47%

Malaysia

Indonesia

43%

40%

Thailand Singapore

12%

43%

Philippines Vietnam

3%

52%

36%

Thailand Malaysia

35%

62%

14% 23%

40% Better / Higher

5% 7% 13%

About Equal

Investment*

Situation

Philippines

Employment

In comparison with countries in the ASEAN Region, the Philippines generally exhibited a better / higher results in almost all areas of the AHK World Business Outlook Spring 2023 Survey.

Economy

Philippines Vietnam

54% 21%

48%

Thailand Singapore

43% 30%

45% 24%

3%

50%

5%

55%

20%

Malaysia

33%

51%

16%

Indonesia

33%

53%

13%

Philippines

46%

Vietnam

37%

Thailand

43%

38% 42%

29%

Malaysia

29%

53%

Indonesia

33%

40%

Vietnam

43%

2%7% 12% 16% 9% 9% 7% 20%

50%

44%

40%

Thailand Singapore

12% 9%

48%

Singapore

Philippines

6%10%

48%

55%

12% 43%

31%

55%

2% 14%

Malaysia

51%

31%

Indonesia

47%

47%

Worse / Lower

6%

18% 7%

No investment* Spring 2023

AHK World Business Outlook Survey

8

What are the biggest risks for your company’s economic development in the next twelve months?

Fall 2021

Spring 2022

Fall 2022

Spring 2023

Demand

Financing Conditions

Lack of Skilled Workers

Exchange Rates

Prices of Energy

Prices of Raw Materials

Legal Certainty

56% 15% 23%

27% 24% 28%

26% 18% 12% 9% 15%

39%

40% 38% 35%

55% 51% 36% 28% 29% 22% 20%

32%

49% 45% 41%

34%

49% 50% 26%

17%

14%

28%

41% 43% 34%

40% 44% Labor Costs

20% 24% 29%

20% 15% 23% 22% 24%

33% 32% 30%

30% 28% 22%

44% 45%

55%

64%

Spring 2021

Economic Infrastructure Trade barriers Supply chain Policy regulation / disruptions Conditions preference to (e.g. logistics, local missing companies intermediate goods)

Top 3 Risks for Companies in Spring 2023: 1. Lack of Skilled Workers (44%) 2. Supply chain disruptions (e.g. logistics, missing intermediate goods) (39%) 3. Economic Policy Conditions (35%)

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9

What are the biggest geopolitical challenges from your company's perspective in the next five years?

0%

10%

20%

30%

40%

Fragmentation of the global economy/decoupling

32%

Supply chain diversification

33%

50%

35%

Climate change

25%

Transformation of the economy to sustainable energy/production

Raw material and energy supply security

34%

Digital transformation

35% 37%

Cybersecurity Increase of political influence on supply chains (e.g., through legislation, trade barriers)

42% 47%

Inflation/monetary policy environment

13%

Migration Other

5%

Top 3 Geopolitical Challenges for Companies in Spring 2023: 1. Inflation / Monetary Policy Environment (47%) 2. Increase of Political Influence on Supply Chains (42%) 3. Cybersecurity (37%) Spring 2023

AHK World Business Outlook Survey

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For those who answered “Supply Chain Diversification”: What challenges do you see in diversifying your supply chains and/or sales markets?

0% No challenges

10%

20%

30%

40%

7% 28%

Identifying suitable sales markets/procurement markets

44%

Finding suitable suppliers/business partners

24%

Quality control of suppliers Finding locations with suitable infrastructure for new branches/production sites

17% 25%

High business management costs

20%

High planning costs in the supply chain

19%

Financing

24%

Trade barriers Increased legal and regulatory issues (compliance with country or supply chain due diligence laws, etc.)

Other

50%

36% 3% Spring 2023

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For those who answered “Supply Chain Diversification”: What external support do you use or would you like to receive in diversifying your supply chain or entering new markets?

0%

10%

20%

30%

40%

7%

No external support

42%

Market analyses

Strategic consulting for the development of market entry and expansion strategies

27% 43%

Identification of business opportunities Business partner search

33%

Human resources consulting to assist in recruiting and hiring qualified employees

32%

Assistance in developing marketing strategies and positioning your brand

20%

Legal advice to ensure compliance with local laws and regulations

33%

Supply chain management support to optimize supply chain processes Public promotional activities Other

50%

22% 5% 2% Spring 2023

AHK World Business Outlook Survey

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Labor Costs

Lack of Skilled Workers

Prices of Energy

Prices of Raw Materials

Fragmentation of the global economy/decoupling

Supply chain diversification

Climate change

Transformation of the Raw material and Digital transformation economy to energy supply security sustainable energy/production

Cybersecurity

Increase of political influence on supply chains (e.g., through legislation, trade barriers)

39%

50%

Trade barriers Supply chain regulation / disruptions (e.g. preference to local logistics, missing companies intermediate goods)

46% 35% 7% 7% 6% 0%

22% 15%

33% 25% 25%

47% 7% 7% 6% 13% 15% 20%

27% 31% 33% 38% 25% 32%

38% 34% 25% 34%

24% 13%

33% 24% 15% 29% 15% 34%

34% 44%

51% 48% 45% 13%

13% 22% 24%

27% 0%

33% 24% 21% 14% 26% 30%

22%

47%

52%

62% 56% 46% 51%

Geopolitical Challenges

Inflation/monetary policy environment

24%

33% Infrastructure

13% 19% 20% 22% 23%

22% 15% 7% 7% 6% 0%

Economic Policy Conditions

29% 28%

47%

46%

33% 25% 25%

7% 7% 6% 13% 15% 20% Legal Certainty

35%

27% 31% 33% 38% 25% 32%

34%

25%

24%

34%

Exchange Rates

47%

Financing Conditions

Philippines

13% 19% 20% 22% 23%

Demand

Vietnam

47%

Thailand

13%

13%

15%

29%

33% 24%

22% 24% 13%

Singapore

44%

34%

51% 48% 45%

52% 27%

Malaysia

0%

33% 24% 21% 14% 26% 30%

22%

46% 51%

47%

62% 56%

Indonesia

15%

Risks

38% 34%

ASEAN Comparison: Risks and Geopolitical Challenges

Migration

Other

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AHK World Business Outlook Survey

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Survey Information Employees Worldwide

Sector

11%

20% 38% 54%

19% 50%

8%

The survey was sent out to companies involved in the German-Philippine Business relations with a total of 112 responses collected For more details on the DIHK / AHK WBO and the comparison to the most recent WBO surveys in the Philippines, click the links below: • • •

Manufacturing / construction Trade Services Others

• Less than 100 employees 100 to 1000 employees More than 1000 employees

AHK WBO Survey Results (Spring 2023): https://bit.ly/3AVhjKC GPCCI WBO Survey Results (Spring 2022): https://bit.ly/3TuqbxC GPCCI WBO Survey Results (Fall 2022): https://bit.ly/410FKAW Other surveys / publications: https://bit.ly/3TyYfIL

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Imprint Publisher AHK Philippinen | German-Philippine Chamber of Commerce and Industry, Inc. 8F Doehle Haus Manila, 30-38 Sen. Gil Puyat Avenue | Barangay San Isidro | 1234 Makati City | Metro Manila | Philippines Tel +63 2 8519 8110 info@gpcci.org www.philippinen.ahk.de Photo / Graphic Credits Canva, Flaticon

For Inquiries, Please Contact: Mr. Yves Aguilos Head of Government Affairs and Data Protection Officer E: yves.aguilos@gpcci.org T: +63 (2) 8519 8110 loc. 825 M: +63 917 713 1516 F: +63 (2) 310 3656 GPCCI in Social Media Facebook: https://www.facebook.com/GPCCI.org/ LinkedIn: https://www.linkedin.com/company/gpcci Twitter: https://twitter.com/AHK_Philippinen YouTube: https://www.youtube.com/channel/UCqXbBFbpoELSZPoR2n3sCA

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