Who is afraid of Donald Trump? (2)

PHILIPPINES - In Brief 15 Nov 2016 by Romeo Bernardo
Summarized below is our assessment of risks for the Philippines under a Trump presidency. The most immediate impact will be on migration and remittances. Latest government data show that there are some 270,000 Filipinos working in the U.S. who are not properly documented (plus about 129,000 there on temporary work permits). aStricter implementation of US immigration laws will affect these directly but the overall impact on remittances is not expected to be large.(Assuming each sends an average $200/month home, the annual figure would sum to about 1/3 of 1% of total remittances last year.) Policy uncertainty will also put new investment plans on hold as investors re-assess and weigh risks.In the five years to 2015, the Philippines received $1.8 billion from US investors (27% of total b), topping other countries.We see two sectors particularly at risk: (a)The top-of-mind concern of analysts is how the growing BPO sector, which exports mostly (77%) to US firms, will fare going forward.As we noted earlier, c the Philippines has compelling cost advantage.However at the margin, to manage political and policy uncertainties, BPO investors may well decide to just switch earlier to artificial intelligence and other labor saving technologies to manage political and policy uncertainties.Hence, unlike in past years, the industry may not be able to meet its target revenue growth of 9% CAGR over the next six years. (b)But it seems more likely from Mr. Trump’s constituency that manufacturing jobs are at greater risks, which may see more slowdown in the growth of global value chains.For the Philippines, this would translate into less investments in the electronics sector, which account...

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