Changing Economic Landscape and its impact on procurement and supply chains Jonathan Ravelas

Transcription

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2 Changing Economic Landscape and its impact on procurement and supply chains Jonathan Ravelas

3 Presentation Outline I. World Economy II. Outlook on the Philippines III. Risks IV. Implications to Supply Chain/Procurement V. Summary

4 World Economy

5 World Economy The rising US Dollar The China Slowdown The Falling commodity prices

6 World Growth Country Last (2Q15) 2015F 2016F 2017F World * USA Euro Zone Japan BRICS China Asia Indonesia Philippines Thailand * As of April 2015 (1Q15) Source : Bloomberg LP, BDO as of 29 Sept. 2015

7 The FX Downward Spiral Spot Returns (%) from Jan Sept (Base Currency: USD) Source: Bloomberg LP Global developments weakened the Peso: China slowdown Upcoming US Fed. interest rate hike

8 The Rising US Dollar

9 China growth and commodity prices fall Commodities Index (USD) China GDP Growth (%) Source : Bloomberg LP

10 PH still 3 rd fastest in the region GDP Growth Rate India China Philippines Malaysia Indonesia Taiwan Thailand Singapore S. Korea Hong Kong Source: Bloomberg LP 1Q15 2Q15 Strong fundamentals support growth. 10

11 Outlook on the Philippines

12 PH: Outlook Summary GDP (%) CPI (%) FX (USD/PhP) Interest Rate BSP (O/N) PSEi PDST-R2 3M PDST-R2 5Y 2014 Last 2015F 2016F 2017F , (2Q15) 0.6 (Aug) (Oct 01) 4.00 (June) (Oct. 01) (Oct. 01) 6, (Oct 01) , ,500 9,000

13 But the PH economy continues to grow. 35, , , , , , , GDP Growth Rate Consumer Spend (PhPbn) OFW Remittances (USD mio) GDP Growth Rate (%) Source: Bloomberg LP, BDO, NCSB, BSP as of 29 Sept Driven by steady consumer spend, service industry revenues and OFW remittance flows.

14 PH has a growing middle class. Year Working Age Population (15-64 Yrs. Old) % of total population Source: PSA ,453 59% ,869 61% ,798 63% 2015F 65,286 63% 2020F 71,717 64% 2025F 78,019 65% 2030F 84,088 66% 2035F 89,683 66% 2040F 94,731 67% Boosted by the BPO sector and improving educational standards (K to 12 program)

15 Mar-07 Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Inflation And Interest Rates Headline Inflation PDST-R2 3mo. PDST-R2 5yr Source: Bloomberg LP Manageable inflationary and interest rate environment boost business and investor interest.

16 However, FDI remains low vs. peers Foreign Direct Investments as Percent of GDP in ASEAN COUNTRY Brunei D Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Vietnam Source: World Bank

17 The Business Picture Key industries: Retail Construction/real estate Increasing number of foreign brands enter the PH market. Strong demand for office and retail space.

18 Stocks: What s New In The Market? Source: Bloomberg LP PSE migrates to a new system Growing number of IPOs and firm mergers and acquisitions

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20 The Political Scene Pulse Asia SWS Survey Dec-14 Mar-15 Jun-15 Sep-15 Dec-14 Mar-15 Jun-15 Sep-15 Grace Poe 18% 14% 30% 26% 21% 31% 42% 26% Manuel "Mar" Roxas 6% 4% 10% 20% 19% 15% 21% 20% Jejomar Binay 26% 29% 22% 19% 37% 36% 34% 24% Rodrigo Duterte 12% 15% 16% 5% 15% 20% 11% Ferdinand Bong Bong" Marcos 4% 6% 6% 3% 7% 3% 4% Joseph ERAP Estrada 10% 12% 10% 5% 9% 11% 7% 3% Miriam Santiago 12% 9% 6% 3% 10% 11% 4% 2% Panfilo "Ping" LacsON 2% 1% 2% 2% 2% 1% 7% 0.8% Alan Cayetano 3% 3% 2% 1% 3% 4% 2% 0.8% Francis "Chiz" Escudero 7% 4% 9% 8% 4% 4%

21 Implications on the Supply Chain/Procurement (Risks and Opportunities)

22 Lower oil prices Reduced commodity costs Reduced transportation costs for inbound and outbound logistics STRATEGY: Renegotiate contracts with transportation suppliers For industries using oil as input: manage price volatility via hedging and other financial instruments

23 Economic slowdown + Geopolitics China slowdown affects manufacturing -higher supply chain risks Unrest in the Middle East, Central Asia and Russia -affects procurement of materials in the region STRATEGY: Identify alternate supply bases to offset risks Nearshoring as a viable alternative due to increased automation to result in lower risks, improved service and bonuses

24 Climate change + sustainability Green initiatives and sustainable initiatives as key agenda points of businesses Renewable energy sourcing as key focus for companies STRATEGY: Include sustainability initiatives in supplier relationship management requirements Encourage lower consumption and efficient processes

25 E-Commerce + data security Cloud-based flexible technology -expected to boost procurement processes Data confidentiality as key criteria for supplier relationships STRATEGY: Implement SMAC-based technologies to drive procurement processes Develop decision models based on data analysis

26 Summary

27 What to watch out for? Upcoming ASEAN integration Further effects of the El Nino 2016 National Elections

28 SUMMARY Global growth in the horizon but markets are volatile. PH remains on the growth path. Many risks and opportunities for the supply chain.

29 Thank you!