Swedish businesses are the most bullish than ever before on prospects in the Philippines, even as same-old investor concerns are in the way of reaching the optimum bilateral trade and investment potentials.
The 2024 Philippine Market Report jointly launched by the Embassy of Sweden in Manila and Business Sweden or the Swedish Trade and Invest Council on Thursday, Dec. 13, reflected what Chargé d'-Affaires Harald Fries said should be the subject of constructive dialogue between the Philippine government and Swedish businessmen.
The report "highlights the continued growth and potential of the Philippine market, and underscores the country’s open-door policy for foreign investments," Fries noted, adding that the Philippines "offers great potential for business and innovation, not least in areas where Sweden excels—such as sustainability, technology, infrastructure, and the green economy."
However, "all is not rosy and well—the report notes that Swedish companies face red tape, regulatory issues and high energy costs," Fries pointed out.
Sweden's envoy is optimistic that more businesses and investors from his home-country would come to the Philippines in 2025 and beyond.
Business Sweden's Philippine trade commissioner Johan Lennefalk said that in general, Swedish companies here see a pro-business stance from the government led by President Ferdinand Marcos Jr., even as they still face bureaucratic and operational hurdles.
For instance, securing permits remains a challenge in the ease of doing business, he noted.
It does not help that the Philippines is lagging behind its neighbors in terms of infrastructure for logistics as well as digital and physical connectivity, even as this is already being addressed by the current administration's Build Better More program, according to Business Sweden consultant Jayne Yang.
Also, Lennefalk said Swedish investors would prefer 100-percent business ownership in their investment destinations to fully control operations, which cannot happen in the country given the Constitutional restriction on foreign capital.
While these challenges linger, Lennefalk said these are outweighed by the positive and strong macroeconomic trends benefitting the Philippines highlighted by the report, namely: the Asia-Pacific region driving global growth; the country’s strategic position conducive to hosting businesses’ regional hub as it's the most service-oriented economy in Southeast Asia; the Philippines being the region’s fastest-growing economy; a youthful Filipino workforce; as well as a proactive private sector here promoting public-private partnerships (PPPs), especially in the infrastructure and energy sectors.
For Business Sweden, areas for intensified trade and investment relations include the Philippines’ key infrastructure program, energy sector stability, the mining sector’s still largely untapped potential, universal health care (UHC) opportunities, robust consumer market growth, as well as opportunities in the information technology-business process outsourcing (IT-BPO) and manufacturing industries.
Without disclosing details, Lennefalk noted that during the past few months, at least five Swedish enterprises expressed interest in setting up shop in the Philippines, while existing investors are expanding to new and bigger offices as well as hiring more workers.
In terms of bilateral trade, the report cited that at present, only 1.7 percent of Sweden's Asian exports reach the Philippines.
"Sweden is currently exporting $159-million worth of goods to the Philippines and importing $64 million. Trade has continuously grown the past decades at an average of 3.3 percent per year but the past three years have seen a significant increase in the pace at around 11 percent. However, there is potential to even further strengthen the relationship, as the Philippines has experienced strong export growth over the past 27 years, averaging an annual increase of 4.8 percent, which surpasses the global benchmark," the report said.
At present, more than 50 Swedish firms have established significant presence in the Philippines, operating across a diverse range of sectors, from energy and pharmaceuticals to IT-BPO, transportation, mining equipment, industrial machinery, defense, air traffic management, telecommunications, and consumer goods.