The three major engines of economic growth are being tested in the domestic and external fronts and may ironically slow down the country’s expansion.
President Donald Trump’s protectionist stance has endangered the flow of remittances to the Philippines and is stunting the expansion of the business process outsourcing sector. The Boracay mess, in addition, will certainly make a dent on tourism earnings unless the government finds a quick fix and lures back foreign tourists who have been enamored by the island’s powdery white sand.
Bangko Sentral ng Pilipinas Diwa Guinigundo conceded that President Trump’s rhetoric to keep jobs in the US mainland could trim remittances of Filipino residents and prompt American companies to think twice about outsourcing some of their jobs here.
Some members of the BPO Association of the Philippines, according to the Bangko Sentral official, had informed the government that they were holding back expansion projects in the Philippines because of Trump’s protectionist policy. BPO companies now see the sector’s annual revenue growth slowing at around 9 percent or 10 percent from the original expectations of a 25-percent expansion.
Remittances and BPO receipts account for a combined foreign exchange inflows of $50 billion annually and have supported the peso against the US dollar in recent years. Remittances contributed around 10 percent to the gross domestic product last year. Money sent home by overseas Filipinos reached a record $28.06 billion in 2017, up 4.3 percent from $26.90 billion a year ago in 2016.
Tourism, meanwhile, has directly generated jobs and contributed significantly to the country’s foreign exchange reserves. That may not be the case this year if the fallout from the Boracay closure is not contained. At stake is the livelihood of 17,000 hotel, restaurant and other tourism workers. About 11,000 construction workers are also on the island. Boracay drew some two million visitors in 2017, contributing roughly $1 billion to the economy.
The Department of Tourism, thus, must do a more aggressive marketing of other alternative tourist destinations in the Philippines to lure more foreign arrivals amid the six-month closure of Boracay Island. The Department of Trade and Industry, for its part, should expand the country’s export markets to mitigate the reduced earnings from BPO companies and slowing remittances.