Tags: Banking, Entrepreneurship
By Alexander Villafania
CABANATUAN CITY, NUEVA ECIJA – Small-to-medium enterprises or SMEs should never be afraid to invest in expanding operations amid a steadily stabilizing economy, according to a top executive of financial institution Banco de Oro (BDO).
Long-term investments also support the the formation of the goals of the new Philippine government, according to BDO First Vice President and Chief Market Strategist Jonathan Ravelas.
Speaking to regional entrepreneurs during a forum here, Ravelas said investments among SMEs will bear long-term benefits to both the company that made the investment, as well as other affiliate and supporting industries.
Ravelas explained that despite negative effects of the global economic slowdown in the last few years, the Philippines, along with its Asian neighbors, continue to survive the challenging times.
Citing various reports, he said global recovery is also driven by the “survivability” of Asia, which has grown at least seven percent in the first months of 2010. This is higher than that of the United States and even Europe, which reported growth rates of 3.6 percent and 1.5 percent, respectively.
As for the Philippines, Ravelas said the country’s gross domestic product (GDP) growth is expected to reach five percent by the end of 2010, higher than 0.9 percent in 2009.
“A number of factors that contributed to the resiliency of the Philippines are the strong remittances of overseas Filipino workers (OFWs), the growing business process outsourcing (BPO) industry, and the promises of the new administration,” he said.
“These things encourage SMEs to continue investing,” he added.
A report by the Bangko Sentral ng Pilipinas (BSP) indicated that remittances from OFWs in 2009 reached $17.34 billion, up from $14.4 billion in 2008.
Likewise, the Business Process Association of the Philippines (BPAP) recorded US$7.2 billion in revenues in 2009 for the BPO and information technology services sector.
Ravelas also said that these positive forces are also lending a hand in stabilizing the country’s inflation rate, a factor that affects the motivations of businesses to invest. Lending will, thus, become easier and more stable for these SMEs.
“Interest rates will rise but it will remain stable, thus giving SMEs much higher long term gains when they invest today,” Ravelas said.
He added that the gradual recovery of domestic consumers’ buying power will also contribute to short term gains for SMEs.
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