Top 10 projections for Asian economies

* This is my article in BusinessWorld last January 12, 2017.


Taking off from the paper by a friend and fellow columnist Romy Bernardo’s “Wishes for the economy in 2017” last Monday, this paper will make some raw projections of GDP size until 2026.

The base document is the IMF’s World Economic Outlook (WEO), October 2016 database. In the table below, GDP size is based on purchasing power parity (PPP) values, not nominal or current values. Actual data for 2006, 2016, and 2021 are IMF projections.

Now this paper will take a longer but very raw view by projecting potential GDP size by 2026. Here is the raw and crude methodology.

(a) Take the GDP multiple or expansion from 2026 to 2021 per country, call it Y.

(b) Assume that the same degree of expansion will occur from 2021 to 2026.

(c) GDP 2026 = GDP 2021 x (1 x Y).

Readers with more advanced data and econometric tools will scoff at this raw methodology but please understand that this is just an attempt and the limitations of the assumption have been stated. So here is what we can project in the next few years.

From this table, we can summarize important projections for selected Asian economies.

  1. In 2016, four Asian countries would remain in the 10 largest economies in the world: China, India, Japan, and Indonesia.
  1. Six of the 10 ASEAN countries would belong to the Top 40 largest economies in the world in 2016: Indonesia, Thailand, Malaysia, Philippines, Vietnam and Singapore.
  1. By 2021, Indonesia will overtake Brazil in the seventh spot and will be in a striking distance to dislodge Russia in the sixth spot.
  1. Also by 2021, the Philippines will rise to the 26th spot and Malaysia will rise to the 27th spot, overtaking Argentina and Netherlands. Malaysia and the Philippines will also belong to the club of trillion-dollar economies by around 2018 or 2019.
  1. Vietnam will rise from its 36th spot in 2016 to 33rd or 32nd in 2021, overtaking UA Emirates, Algeria, and Iraq, and possibly South Africa.
  1. By 2026, assuming that the raw projections will somehow hold, the combined size of China and India will be larger than the combined economies of US, Japan, Germany, Russia, Brazil, UK, France, Mexico, and Italy.
  1. Also by 2026, Indonesia will become the 5th largest economy in the world, overtaking Japan, Germany, Russia, and Brazil.
  1. And the Philippines will rise to the 22nd spot, further overtaking Taiwan, Nigeria, and Poland. It will also be in a striking distance to overtake Thailand and Australia by then.
  1. Pakistan and Vietnam, also having big and young population like India, Indonesia, and Philippines, will also significantly expand their economic sizes and improve their ranking.
  1. While Japan is expanding marginally, South Korea will sustain its growth. Now, a collapse of North Korea (possible within the next six to eight years) and unification of the two Koreas will possibly make them overtake France in the #10 spot.


Many things will happen in the coming years so those IMF projections for 2021 and the assumptions made in this paper for 2026 can be considered as suggestions with some material basis. We still take actual numbers as they become available as basis for policy reforms.


Other Asian governments should take lessons from the experience of Europe and Japan: an ageing population will be a drag in further economic expansion. Policies that control population or heavily restrict migration are wrong, as wrong as trade protectionism, heavy taxation, and stifling business regulations. Governments should avoid these policies.

Top 10 positive news in Asian trade

* This is my article in BusinessWorld last January 04, 2017.


Global trade has significantly slowed down in 2015 which is ironic because it was the start of significant oil price declines. After recovering from the 2009-2010 global financial turmoil that started in the US, global exports reached $18.3 trillion in 2011, $19.0 trillion in 2014, but declined to $16.5 trillion in 2015.

Nonetheless, there are some good news in Asian trade which battled this global trend in export decline.

Below is my list of these positive developments.

1 China, Vietnam, Hong Kong, and the Philippines did not follow this global trend. Their exports in 2015 were higher than their 2011 levels. For the Philippines, exports reached $58.6 billion in 2015, higher than 2011’s $48.3 billion.

2 Many Asian economies remain leading exporters and importers in merchandise or goods trade, led by China, Japan, South Korea, and Hong Kong.

3 Five ASEAN countries are important players in global merchandise trade with at least $150 billion in exports. The Philippines is playing a far catch up with Indonesia and Vietnam.

4 In services trade (including revenues from tourism and business process outsourcing (BPO) firms) many Asian economies still remain part of the big- and medium-size players, at par or even larger than the average European economies. The $915-billion revenues in 2015 is for all 28 EU economies.

5 Within the ASEAN, the Philippines is a medium-size services exporter while Indonesia did not belong to the top 50 in 2015 (see Table 1).


6 In some sectors, the Philippines ranked #10 globally in 2015 in the exports of telecommunications, computer, and information with revenues of $3.5 billion, and #6 in exports of computer services with revenues of $3.2 billion.

7 Of the economic blocs and free trade areas (FTAs) in the world, ASEAN is the third biggest next to the European Union and North American FTA (NAFTA). They are followed by the Gulf Cooperation Council (GCC), European FTA (EFTA), SAARC Preferential Trading Arrangement (SAPTA), and Mercado Común del Sur (MERCUSOR).

8 An expanded ASEAN + 6 (China, Japan, South Korea, India, Australia, New Zealand) under the Regional Comprehensive Economic Partnership (RCEP) will easily overtake both the EU and NAFTA in total merchandise exports. Those six partners are huge exporters except New Zealand (see Table 2).

9 The statement “this is the Asian century” in terms of trade and GDP growth will become true starting this decade. The main factor to sustain this momentum is Asia’s huge and generally young population especially in India, Indonesia, Philippines, and Vietnam, comprising 1.7 billion people with an average age of only 24-25 years old which is one-half of the average age of Japan and many developed countries in Europe.

10 The statement “If America (or Europe) turns protectionist, Asia loses” is wrong. Whoever starts serious protectionism is the loser. Free trade creates good will with other countries while expanding the choices and options for local consumers and manufacturers, which expand their productive capacity.

Should Mr. Trump proceed with his campaign promise to ditch the Trans-Pacific Partnership (TPP), it can be good news for other Asian economies that are outside of the five Asian economies that are part of the TPP. They are expected to suffer some exports decline to big markets of the US, Canada, and Japan due to trade diversion from non-members to TPP members.

Freer trade and fewer restrictions in the movement of goods and people are becoming the norm in emerging and transitioning economies of Asia than in developed Asia, Europe, and America.

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers and a SEANET Fellow. Both institutes are members of Economic Freedom Network (EFN) Asia.


Disruptions in Asia and the world

Below are some slides given by Suraj Moraje, Managing Partner of McKinsey and Co. Manila, “No Ordinary Disruption”, during the BWorld ASEAN Regional Forum last November 24, 2016 at Conrad Hotel, The commentaries are mine, not Suraj’s.

My first and last visit to Shenzhen, China was in 1998. There were many tall buildings already, roads are wide, but not as many as shown in the photo below.


Good comparison by Suraj here. ASEAN economies are modernizing and urbanizing fast while keeping their average population young. Modern technology will quicken the pace of productivity improvement of these young ASEAN people. It is really global enterprise competition and their endless innovation that modernize things faster, that results in mass production of many things, not so much due to government programs.


Big, young population. Many countries and blocs of countries like the EU salivate at this big advantage of the ASEAN. Big but ageing population means two requirements — more migrant workers (from Asia), and/or more robots. But robots cannot change adult or baby diapers with warmth and smiles. This is also one reason why I never supported the PH state-sponsored population control aka RH law. Using taxpayers money and government agencies to “suggest” to people that big population is wrong.


On the technology aspect, I find these slides by Suraj very enlightening. But despite the “labor displacing” image of modern technology (self-driving cars, trucks, mechanized construction, etc.), I believe otherwise. I think that more modern technology will mean more jobs — people who will manufacture, assemble, repair, upgrade those machines, engines and robots. All machines and bots will get “sick” and they will require people to fix them, upgrade or dispose and replace them.


One slide and arguments presented by Suraj that I don’t agree with, the latter slide. Inequality is not a problem, poverty is. More inequality due to endless innovation and competition actually pulls up hundreds of millions of people out of poverty. Poor people who used to ride cows, carabaos and bicycles to work now ride motorcycles, e-bikes, 2nd-hand cars, or air-con vans and buses. They move faster, do multi-tasking and accomplish more things, so their income and network increases.


Thanks for those wonderful insights and information, Suraj. One more reason why BWorld fora are indeed very enlightening and highly educational.

Asian stock markets capitalization

* This is my article in BWEconomicForum last December 14, 2016.

The stock market is one of several indicators that show how an economy or a country is doing because it represents the inflow and outflow of investments, which are mainly driven by outlooks over the short and medium terms. It is also an indicator of how the rule of law is respected or trampled by a government in power.

During the BusinessWorld-PAL ASEAN Regional Forum last Nov. 24 held at Conrad Hotel, SM MOA Complex, among the sessions tackled was “Unity in Diversity: A Political-Economic Outlook.” The speakers were Department of Budget and Management (DBM) Secretary Benjamin E. Diokno, Asian Development Bank (ADB) Country Economist Aekapol Chiongvilaivan, and McKinsey Managing Partner Suraj Moraje, and Philippine Stock Exchange (PSE) President and CEO, Hans B. Sicat.

Mr. Sicat said that year to date (ytd), there has been net foreign buying of P17.6 billion or $373.6 million.

But in the period from Aug. 23 to Sept. 23 or one month straight, there was sustained net foreign sell off. The peso-dollar exchange rate also experienced significant depreciation from mid-September, touching the P47-to-a-dollar level and never looked back until it reached the near P50 level in late November.

This is bad news because the PSE was among the best performing stock markets in the region over the past decade.

The table shows the following:

One, in terms of expansion of stock market values in just one decade from 2005 to 2015, the best performing was China, which expanded by more than 20 times, the Philippines with more than six times, Vietnam with five and a half times, and Indonesia with 4.3 times.

, in terms of stock market capitalization as percent of gross domestic product in 2015, first is Hong Kong, second is Singapore, third and fourth are Taiwan and Malaysia.
And three, global capitalism is generally more generous to emerging economies like China, the Philippines, and Vietnam. Their previously highly repressed financial sector when liberalized has posted fast growth and expansion in a short period as one decade.
Let us now check another piece of data, the annual growth rate of stock markets of the same countries and economies over the past six years.
Meanwhile, we also need to recognize several facts:

, the Philippines has the best performing stock market in the Asia Pacific over the past six years. Despite its warts and problems, the past administration has done something that really improved business confidence in the country.

, China, Taiwan, Singapore, and Vietnam have experienced roller-coaster rides in their equities markets.

, this year, though, especially the second half of the year, is particularly bad for the Philippines, from the best performing to badly performing over the past few months.
It seems the current administration in the Philippines is reversing the business confidence built over the past six years.
The new President’s disrespectful, crass, and vulgar assertions with his frequent “kill, murder, shoot” pronouncements could have contributed to the possible reversal in business confidence, at least in the stock market.

A more civilized President, an anti-drugs war with sufficient respect for human rights of the accused, an explicit disavowal of possible declaration of Martial Law and suspension of the writ of habeas corpus, and a business environment conducive to investors is badly needed.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers and a SEANET Fellow.

Free trade means more investments and people mobility

* This is my article in BusinessWorld last December 15, 2016.


Free trade means giving people and private enterprises the freedom to produce more commodities that consumers demand at certain prices. These producers then leave sectors and areas where expected returns and other gains are lower if not dwindling.

This may sound “heartless” for losing sectors but whether one supports free trade or protectionism, there will always be winners and losers. It is just that there are more “net gains” from trade while there are more “net losses” from protectionism.

In a paper “Goods trade liberalization under the ASEAN Economic Community: Effects on the Philippine economy” published in the Philippine Review of Economics (PRE), December 2015, authors Dr. Ramon Clarete (UPSE) and Philip Arnold Tuano (AdeMU) examined the economy-wide effects of goods trade liberalization in the ASEAN. They used the Global Trade Analysis Project (GTAP) model in assessing the impact of the ASEAN Free Trade Area (AFTA) implemented in 1992.

The important provisions of AFTA mandated the 10 countries to: (a) reduce trade taxes and tariff on goods coming from other member countries, (b) remove quantitative restrictions on goods and convert it into tariffs that should decline through time, (c) reduce other non-tariff measures (NTMs), and (d) enforce rules of origin or goods should have local content of at least 40% of the freight on board (fob).

The results for the Philippines in their study showed the following:

  1. Production effect: Of the 40 industries representing the Philippine economy, 24 suffered some output decline and 16 experienced output expansion at a bigger rate than the losses of the former.
  1. Employment effect: Of the 40 industries, 31 experienced decline in the hiring of skilled labor while nine experienced expansion at rates larger than the combined employment losses in the former.
  1. Trade effect: Thirty-six of the 40 industries that imported goods were able to benefit as compared to the 16 industries that engaged in exports. However, the gains were much larger than the losses of the other industries.
  1. Price effect: Wages of both skilled and unskilled labor, cost of capital increased while land rent declined.
  1. Overall effect: The Philippines gained some $237 million, equivalent to 0.05% of GDP, as a result of trade liberalization in goods under AFTA.

There are other benefits from trade liberalization besides the four measured by the above study. Freer trade creates more goodwill not only in trade and investments but also in mobility of foreign workers/managers and tourists across countries through more cultural and educational exchanges, and so on.

Here are some data on revenues from merchandise or goods exports, foreign direct investment (FDI) net inflows (i.e., inflows minus outflows for the given year), worker remittances and compensation of employees, and international tourism receipts that correspond with expansion in tourist arrivals.


The Philippines did not expand its merchandise exports as fast as compared to its many ASEAN neighbors. There are many factors for this, including a generally over-valued exchange rate, and many trade bureaucracies that prolong the process and increase the cost of exports and imports. All the four tigers in North-East Asia plus Singapore and Thailand are major exporters.

In FDI net inflows though, the Philippines reported an expansion of almost four times in just 10 years. Vietnam and Singapore benefitted the most in the southern region while China and Hong Kong continue to attract huge FDIs.

In labor remittances, China is #1 in the world while the Philippines is #1 in the ASEAN and about #4 worldwide, next to China, India, and Mexico perhaps.

The Philippines also reported that its receipts from international tourism expanded by more than twice.

Notice that five ASEAN neighbors that have higher merchandise exports are also the same countries that have higher tourism receipts than the Philippines.

The lesson here is that trade liberalization — by cutting tariffs to very low, if not zero, rates and reducing non-tariff barriers — can result in more FDI inflows, more tourist arrivals, more cultural exchanges in the region.

Other factors should accompany trade liberalization of course. Like better airports, seaports, and roads; cheaper electricity and high power capacity; more competition among airlines and shipping companies; fewer bureaucratic processes in investments and mobility; rule of law and reduced corruption and instability in enforcing various local and national laws.

Fewer taxes and trade restrictions, stronger law enforcement are just among several key ingredients to further modernize and reduce poverty in the Philippines and other developing countries.


Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers, a SEANET Fellow and both institutes are members of EFN Asia.

Economic freedom, taxes and tariffs in Asia

* This is my article in BusinessWorld last December 01, 2016.


Human prosperity is not possible if there is no economic freedom, if people do not have the freedom to own private property and have freedom to trade. Misery is the result if people live under political dictatorships and bear the effects of the state’s economic central planning.

These, among others, were the topics discussed in the two-day Economic Freedom Network Asia (EFN Asia) Conference 2016 last Nov. 22-23, 2016 at Dusit Hotel, Makati City. The event’s theme was “Economic freedom and human rights in business,” primarily sponsored by EFN Asia and the Friedrich Naumann Foundation for Freedom (FNF).

The event also launched the results of the Economic Freedom of the World (EFW) 2016 Report by Fraser Institute in Canada. The EFW index is measured by getting the scores (0 to 10, zero is totally unfree and 10 is full economic freedom) of countries covering five criteria: (1) Size of government, (2) Legal system and property rights, (3) Sound money, (4) Freedom to trade internationally, and (5) Regulation.

Countries with big governments and high taxes get low scores in the first measure while nations with highly corrupt legal systems and unstable property rights protection will receive low ratings in the second, and so on. The composite score of the five criteria covered is generated and countries are ranked from highest to lowest (see table).


The numbers on the right show the following.

One, for many years now, Hong Kong and Singapore are recognized as the two freest economies in the world. Their governments are strong in enforcing the rule of law and protecting property rights, have low income tax rates, zero or near-zero tariff rates. They may have many non-tariff barriers (NTBs) but that is for another paper.

Two, many ASEAN countries are in the middle tier in global ranks out of 157 countries covered. Outliers are Singapore which is high up there, and Vietnam and Myanmar which are among the bottom-ranking countries.

Three, the Philippines and other ASEAN countries’ score and global ranking do not significantly move up or down and I think there are flaws in the scoring made by Fraser. Here’s why.

In sub-area “Freedom to own foreign currency bank accounts,” the Philippines, Malaysia, Thailand, and Vietnam got 0 (out of 10). Similarly, these four countries also posted low scores in criteria 3, Sound Money. I think foreigners and foreign corporations can own forex bank accounts here in the Philippines, also in Malaysia, so why did Fraser give a score of 0?

In sub-area “Capital controls,” the Philippines, Malaysia, and Vietnam scored only 0.77 while Indonesia and Thailand scored 1.54 (again, out of 10) such that their scores under Area 4, Freedom to Trade Internationally, are again low.

Perhaps the capital control that Fraser refers here is the maximum amount of Pesos (about P10,000) and dollars ($10,000) that Filipinos and foreigners can bring in or out when they travel abroad. But many travelers hardly use big cash for their transactions, they use credit and debit cards. People can also send huge amounts of money anytime via banks or money couriers from abroad to the Philippines and vice versa, without capital control limits.

Since countries’ global ranks are separated only by one or two decimal places, significant low score in Areas 3 and 4 in this case would mean overall low score. As a result, the Philippines’ overall score of 7.01 made it rank 80th while Taiwan’s score of 7.65 made it ranked 23rd. A difference in score of 0.64 already spells a huge difference of 67 places in global ranking.

Fraser should either check its data properly or adjust the scoring.

Instead of 0 or 10 for “freedom to own forex account,” “capital control” and other sub-areas, it may adjust the score to 0 or 4 or 5. This will reduce the distortion in overall score and hence, in global ranking.

Nonetheless, Fraser is doing a good job in promoting the philosophy of economic freedom, free trade, rule of law, low taxes and limited government. Its annual EFW report is being cited in various international studies and helps guide civil society and corporate leaders, government and public policy makers in instituting reforms towards a freer, more prosperous world.


Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers and a Fellow of SEANET. Both institutes are members of EFN Asia.

ASEAN multinationals

* This is my article in BusinessWorld last November 23, 2016.


Until the 1980s, when people talk about multinational enterprises (MNEs) — also known as multinational companies (MNCs) or transnational corporations (TNCs) — they refer mostly to multinationals from the US, Canada, Europe, and Japan. Three decades after, that has significantly changed.

The rise of MNEs from developing and transition economies, especially those coming from China, Hong Kong, South Korea, Taiwan, Brazil, India, and several ASEAN countries become more prominent each year although multinationals from the industrial west remain very large and dominant.

This is consistent with global trade and capital liberalization where economies and sectors that show huge factor endowments and potentials for global growth attract both trade and investment flows. Developing countries with huge populations like China, India and the Philippines, and developing economies with highly skilled workers and innovative and aggressive companies like Hong Kong, Singapore and South Korea, are able to slowly put their MNEs in the global map.

The United Nations Conference on Trade and Development (UNCTAD) produces the World Investment Report (WIR). Its WIR 2016 disclosed the figures for 2014 of the world’s biggest nonfinancial MNEs, both in developed and developing countries.

Below are the biggest MNEs from the ASEAN. The Transnationality Index (TNI) is calculated as the average of the three ratios: foreign assets (FA) to total assets, foreign sales to total sales, and foreign employment to total employment (see table).


There are at least two things that are prominent in the above table.

First, 17 ASEAN-based MNEs have made it to the top 100 MNEs from the developing world: 10 from Singapore, 5 from Malaysia, 1 each from Thailand and the Philippines. The TNI of these 17 companies are generally high, 11 of them have TNI of 60% or higher.

Second, San Miguel Corp. is dynamic enough to have plenty of branches and subsidiaries in the region and other parts of the world. It is indeed the #1 brand from the Philippines that has high regional footprint, and known even in some industrial economies in the west.

But there seems to be a mistake in the UNCTAD table, saying that SMC’s TNI is 71% when it looks like having only 30% or lower.

Other big MNEs from developing Asia are the following:

  1. Hutchison Whampoa Ltd. (Hong Kong, Transport and storage) with FA of $91B.
  2. Hon Hai Precision Industries (Taiwan, Electronic components) with FA of $73B.
  3. China National Offshore Oil Corp. (China, Mining, quarrying and petroleum) with FA of $71B.
  4. Samsung Electronics Co., Ltd. (South Korea, Communications equipment) with FA of $56B.
  5. Tata Motors Ltd. (India, Motor Vehicles) with FA of $30B.

The subject of Philippine multinationals will be among the topics to be tackled in the coming BusinessWorld ASEAN Regional Forum this coming Nov. 24, 2016 at Conrad Hotel, SM MOA Complex. It is a regional conference with the involvement and sponsorship of many big corporations in the country.

Among the speakers will be CEOs and managers of big Philippine MNEs, and MNEs from abroad that are operating in the Philippines. This two-way exchange of ideas and experiences will be very productive for small and medium enterprises (SMEs) in the country that aspire to have regional footprints, and later barge into the continental and global list of successful and big MNEs.

After all, Facebook, YouTube, Twitter other big brands now were nonexistent until about 13 years ago. Endless innovation, consumer-friendliness and access to more markets abroad have allowed them to leapfrog from small start-ups to huge, multibillion-dollar global companies.

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers and a fellow of SEANET. Both institutes are members of the Economic Freedom Network (EFN) Asia.