German firms operating in the Philippines have projected sluggish business outlook as the impact of the worldwide energy crises and supply chain disruptions continue to affect their operations, according to a Fall 2022 report by the German – Philippine Chamber of Commerce and Industry (GPCCI – AHK Philippinen).
While the outlook could be sluggish, the AHK World Business Outlook Special Evaluation Asia Fall 2022 report also said that majority of companies involved in German-Philippine business relations manifest a better business development despite risks projected.
The report said that German firms noted of positive local business development, but local economic development remains stagnant.
In contrast to the survey results of Fall 2021 (32%) and Spring 2022 (47%), the Fall 2022 survey showed a notable business outlook on the German companies' developments with more than a half (53%) of the participants perceiving a better business situation for their company. Moreover, it is noticeable that there is a steady decrease in “worse” projections since 2020.
But most of the participants (61%) still forecast optimism in local business development for the next twelve months while 13 percent of them expect worse in Fall 2022, indicating an increase of 12 percent from the 1 percent “worse” ratings of Spring 2022.
In the Fall 2022 report, 39 percent of the participating companies foresee a satisfactory local economic development in the next twelve months. It is also notable that there is a considerable increase of 21 percent in “worse” ratings from Spring 2022 which is even higher than last year at 12 percent.
Furthermore, 44 percent of participating companies expect the same local investment developments in the next twelve months and half (50%) of survey participants said that they will retain their current number of employment.
The Philippine results are better compared to the Asia Pacific results in the survey.
“We are glad to see that companies still experience a better business situation in the Philippines despite growing global economic impediments,” said GPCCI Executive Director Christopher Zimmer.
Meantime, the Fall 2022 survey presented the top biggest risks for companies’ economic development in the next twelve months. The biggest risk reported is supply chain disruption (55%), such as in terms of logistics and missing intermediate goods. Prices of energy ranked second highest concern (50%), exchange rate (43%), and prices of raw materials (41%). Notably, the fifth biggest business risk is lack of skilled workers (40%).
Despite the challenges, the report also showed some advantages for businesses locating in the Philippines.
Majority of the participating companies ranked the availability of skilled workers (54%) as the topmost advantage, followed by labor cost (48%) and network of suppliers in the country (32%).
“With the increasing global impacts of energy crises and supply chain disruptions, German business community now consider looking for new suppliers and relocating their production to boost operations,” said GPCCI President Stefan Schmitz. “We ask the new government to take advantage of this opportunity by using the policy reforms to attract more foreign direct investment inflows in the coming years.”
The Fall 2022 survey was initiated by GPCCI that is participated by 68 companies related to German-Philippines business relations. The participating sectors are from the manufacturing or construction sectors (27%), trade (12%), and services (43%). 44% of the respondents have less than 100 employees, 22% have 100 to 1000 employees, and 34% have more than 1,000 employees.
The AHK World Business Outlook (AHK WBO) is based on a regular DIHK survey among member companies of the German Chambers of Commerce Abroad, delegations, and representative offices (AHK). It encompasses the feedback from more than 3,100 German companies, branches, and subsidiaries worldwide.