Transport Summit 2014: Cargo Transport Prospects Amid Economic Growth

Deputy Director- General Emmanuel F. Esguerra National Economic and Development Authority 23 April 2014

Outline

I. Recent Economic Performance II. Near- Term Outlook/ Medium- Term Target III. The Transport Sector IV. Policy Directions

I.

RECENT ECONOMIC PERFORMANCE

The Philippine economy has been growing robustly

Philippine Real GDP at 2000 Prices (Millions Php) (1960 to 2013)

8,000,000
Real GDP growth

7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 1960

6.8% (2012) 7.2% (2013)

1964

1968

1972

1976

1980

1984

1988

1992

1996

2000

2004

2008

2012

Source: Philippine Statistics Authority and National Economic and Development Authority.

in ppt
10.0 8.0 6.0 4.0 2.0

7.2%
4.8% 2.9% 6.0%

0.0
-2.0 -4.0 1991-2001 2001-2010 2010-2012 2013

Household Final Consumption Expenditure Investment

Government Final Consumption Expenditure Net Exports

in ppt
8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 1991-2001 2001-2010 2010-2012 2013

7.2% 6.0% 4.8%

2.9%

Agriculture

Industry

Services

Strong macroeconomic fundamentals supported this remarkable performance

Low and Stable inflation
9.0 8.0 7.0 Headline Inflation Low-end Target High-end Target

Favorable interest rate & sound banking system

20 15 10 5 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Real interest rates, LHS** CAR, LHS*** NPL Ratio, RHS* 6 10 8

6.0
5.0 4.0 3.0 2.0

4
2 0

2008

2005

2006

2007

2009

2010

2011

2012

2013

Note: Actual inflation figures are based on the 2006 CPI series. *January March 2014

2014*

* December 2013, **As of Jan 2014, *** As of Sept 2013

Sustainable fiscal and external position

80.0 60.0 40.0 20.0 0.0
2005 2006 2007 2008 2009 2010 2011 2012 2013

0.0 -1.0 -2.0 -3.0 -4.0 NG Debt to GDP (LHS) Fiscal Balance to GDP (RHS)

60.0 50.0
52.7

5.7 44.1 37.1

5.4

6.0
5.0 32.6 3.6 30.1 27.0

5.0
3.5 4.0 2.8 3.0 24.1 21.5 2.5

40.0
30.0

31.3

20.0
10.0 0.0

1.9 0.1
2005 2006 2007 2008 2009 2010

2.0

1.0
0.0
2011 2012 2013

External Debt to GDP Ratio (LHS) Current Acct. to GDP Ratio (RHS)

II. NEAR TERM OUTLOOK/MEDIUM TERM TARGET

We aim to sustain the growth momentum

ANNUAL PLAN TARGETS Indicators Gross Domestic Product (%) GVA in agriculture
Baseline (2012)

2014 6.5 -7.5 (0.9)-0.1

2015 7.0-8.0 2.0-3.0

2016 7.5-8.5 2.5-3.5

6.8 2.8

GVA in industry
GVA in services

6.8
7.6

9.8-11.0
6.0-6.9

8.6-9.7
6.8-7.8

9.3-10.3
7.2-8.1

Supported by the following growth drivers

More vibrant manufacturing Robust construction and logistics Buoyant international and domestic tourism Upbeat wholesale and retail trade Robust Business Process Management (BPM) fueling growth in the real estate, renting and business activities sector Agribusiness
Fixed capital formation: higher public construction, including infrastructure and reconstruction; robust private investment in construction and durable equipment Strong household consumption: strong remittance inflows, better employment opportunities, and improved consumer confidence Stronger export of services: good prospects on business process management Improvement of external trade conditions

Supply

Demand

III. TRANSPORT AND STORAGE SECTOR PERFORMANCE

Transport and Storage Sector Share to Real GDP (%) (2013)

Transport and Storage Sector Real Growth Rate (%) (2009 to 2013) 10.0 8.3 8.0

Services (54.0%)

Air Water Storage and services incidental to transport

7.1 6.2

TS (2.8%)

6.0 4.0 2.0 0.0 -2.0 -2.2 -4.0 2009 2010 2011 2012 2013

Land

Industry (32.7%) AHFF (10.4%)

1.4

Source: Philippine Statistics Authority and National Economic and Development Authority.

Transport and Storage Contribution to Real GDP

in ppt
0.25 0.20 0.15 0.04 0.10 0.19

(2009 to 2013)
0.23 0.18

0.05
-0.07 0.00 -0.05 -0.10 2009 2010 2011 2012 2013

Land

Water

Air

Storage and services incidental to transport

Source: Philippine Statistics Authority and National Economic and Development Authority .

10

Expenditure on Transport Equipment Contribution to Real GDP

in ppt
1.20 1.00 0.80 0.60 0.40 0.20 (0.20) (0.40) (0.60) 2009 Road vehicles 2010 Railway transport 2011 Air transport 2012 Water transport 2013 -0.03 0.38 0.97 0.82 0.78

(2009 to 2013)

Source: Philippine Statistics Authority and National Economic and Development Authority .

11

CARGO TRANSPORT Growth Performance of the Philippine Maritime Cargo Sector

Top 10 Developing Countries with Highest Growth Rate in 2012 Throughputs Annual Growth Country/Territory (TEUs) Rate Congo 518,000 44.60% Ghana 889,129 30.00% Kenya 903,000 22.74% Mauritius 417,567 19.06% Saudi Arabia 6,557,448 15.15% Container Port Throughput and Growth Rate for ASEAN Countries in 2012 ASEAN Throughputs Annual Growth Country/Territory (TEUs) Rate Singapore 32,421,602 5.51% Malaysia 20,866,875 3.61% Indonesia 9,324,792 4.00% Thailand 7,373,298 2.80% Vietnam Philippines 6,588,855 5,720,749 246,465 208,914 109,210 4.00% 8.68% 4.00% 4.00% 4.00% -

Russian Federation
South Africa Philippines China Singapore

3,942,628
4,424,254 5,720,749 155,017,351 32,421,602

14.31%
10.88% 8.68% 7.73% 5.51% Cambodia Myanmar Brunei Darsussalam Laos

Source: UNCTAD Review of Maritime Transport 2013

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Challenges and Constraints facing the Sector

o Need for adequate port infrastructure

o Support infrastructure for landside access to and from ports to production areas o Lack of economies of scale

13

IV. POLICY DIRECTIONS

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IV. POLICY DIRECTIONS Cargo Transport in the Updated PDP 2011-2016

To support the expansion of Philippine industries, the government will encourage investments in the development of logistics infrastructure to cater to both domestic and international supply chains.
Review and develop/reform related policies and rules, such as customs practices; trans-shipment of cargoes through various modes (i.e. air-air, seaair, and air-sea); and foreign shipping services along the entire multimodal transportation chain. The government, in coordination with the private sector, will formulate and implement the National Logistics Plan and will target to reduce the share of logistics costs (including shipping) in the cost of goods and services from 23 percent to 15 percent by 2016.

Source: Philippine Development Plan Midterm Update , Chapter 3

15

IV. POLICY DIRECTIONS

Improve connectivity and efficiency among urban centers, regional growth hubs
Philippine Transport Infrastructure Development Framework Plan (World Bank) and Roadmap for Transport Infrastructure Development for Metro Manila, Region III and IV-A (JICA).

16

Transport Summit 2014: Cargo Transport Prospects Amid Economic Growth

Deputy Director- General Emmanuel F. Esguerra National Economic and Development Authority 23 April 2014