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The Philippines has lagged behind its neighbours in developing trade ties, with only 32% of its GDP coming from exports. Exports fell in 2011 as well, although investment in manufacturing over the past two years may reverse this trend in the medium term. Electronics are a major production category, accounting for 51% of exports, with automobiles another strong sector. The Philippines is also looking to grow as a manufacturer of solar panels and components. Major challenges to boosting industry include corruption and infrastructure issues, including high energy prices. This chapter includes interviews with Gregory L Domingo, Secretary, Department of Trade and Industry (DTI); and Lilia de Lima, Director-General, Philippine Economic Zone Authority (PEZA).

For a country surrounded by so many major oil and gas producers, the Philippines’ output is surprisingly low, suggesting that there are reserves waiting to be exploited. This may happen in the near future, with more than two dozen production blocks being put up for tender. Moreover, there are vast reserves waiting to be exploited in what the government dubs the West Philippine Sea, although these territories are disputed by several other countries. In electricity production, coal dominates, although gas has taken a substantial share, and there are plans to triple the nation’s renewable energy capacity. This section has interviews with Jose Rene D Almendras, Secretary, Department of Energy; Erramon Aboitiz, President and CEO, Aboitiz Power Corporation; and Ramon S Ang, Chairman and CEO, Petron Corporation.

The Philippines insurance industry is poised for strong growth from a low base, being ranked as the third-smallest insurance market in the East Asian region. Penetration levels of just 14% indicate that there is considerable room for expansion. Sectoral figures are lobbying, with some success, to rewrite existing regulations, which they feel impose burdensome tax costs on the industry. Other expected changes include a gradual ramp-up of capital requirements, which should precipitate a wave of consolidation among the Philippines’ many small insurance providers. This chapter features interviews with Emmanuel Dooc, Commissioner, Insurance Commission; and Riza Mantaring, CEO, Sun Life.

The Philippines Stock Exchange (PSE) was the best-performing index in Asia in 2011, although it could not match the incredible 37.6% growth it displayed in 2010. Still, the bourse managed to close out the year 4.1% higher, thanks largely to the strong performance of the mining and oil counter. Now managers of the PSE, which is the smallest of South-east Asia’s major stock markets, want to increase the volume and complexity of trading, upgrading technology, allowing shorting, and listing exchange-traded funds. This chapter contains interviews with Hans Sicat, President, PSE; Cecilia Tan, President, BPI Capital Corporation; and Roberto Juanchito T Dispo, President, First Metro Investment Corporation.

The Philippines’ well-capitalised banks enjoyed strong profit growth in 2011, and excess liquidity is the main worry at this point. Much-hyped PPP projects could be a fillip for the sector, providing an avenue for lending. A number of factors point to consolidation in the sector, include the labour intensiveness of Philippines banking, rising capital requirements, and merger incentives from the central bank. Foreign acquisitions are also possible, with the Malaysian lender CIMB a candidate to acquire one or more local banks. This section includes interviews with Amando M Tetangco Jr, Governor, Bangko Sentral ng Pilipinas (BSP); Aurelio Montinola, President, Bank of the Philippine Islands; and Florence Tarriela, Chairperson, Philippine National Bank (PNB).

The Philippines, which was once a diverse mix of sultanates and rajahdoms, was politically unified by the Spanish conquest of the 16th century. Spain ruled until a Filipino rebellion in 1898 ousted them with the support of the US, which subsequently asserted control. The Philippines gained independence after WWII, but dictator Fernando Marcos soon took over, ruling until 1986. Electoral democracy returned after that, but it has been marked by corruption and instability. The new government of Benigno Aquino III – heir to one of the Philippines’ most storied political families – has promised to clean up politics and cut bureaucratic inefficiency. This section features interviews with President Benigno Aquino III; Florencio Abad, Secretary, Department of Budget and Management; and Surin Pitsuwan, Secretary-General, ASEAN. William Hague, UK Secretary of State for Foreign and Commonwealth Affairs, provides a viewpoint on UK-ASEAN relations in the 21st century.