​Who is afraid of Donald Trump?

PHILIPPINES - In Brief 10 Nov 2016 by Romeo Bernardo

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Among ASEAN economies, the Philippines has been tagged as the most at risk from a Trump presidency. Those raising concerns zero in on Mr. Trump’s protectionist bent and espoused policy to discourage outsourcing, as well as his call for stricter enforcement of immigration laws. These, they argue, would adversely affect the two major pillars and sources of resilience of the Philippine economy, i.e., worker remittances and the $21 billion BPO industry, which together make up 16% of GDP in 2015 and support private spending. About a third of remittances ($8.4 billion) are sent from US banks, while 77% of BPO exports is for US-based companies. Moreover, BPOs are projected to grow in importance in the years ahead. The industry’s new roadmap projects revenues rising at over 9% CAGR in the next six years to $38.9 billion by 2022, driven by economic competitiveness considerations. This is despite Artificial Intelligence and other labor saving technological advances, and factors in demonstrated adaptability of Filipino work force in climbing up the value chain. While fears of the unknown are understandable, any risk assessment at this time would largely be guesswork without clarity on Mr. Trump’s precise policy prescriptions and seriousness in implementing them. After all, the Philippine’s cost advantage for BPOs is compelling and any penalty for outsourcing that Mr. Trump has in mind would have to be heavy to be effective, something that a businessman turned leader would easily grasp. What we find interesting is that political analysts are reading in Mr. Trump’s victory an opportunity to reboot Philippine-U.S. relations, with Mr. Trump and Philippine President Rodrigo Duterte se...