Philippines Logistics Risk

Report
Executive Summary
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Philippines Logistics Risk Report Published Date: 01 Jan 2018

Table of contents
BMI View 5
Table: Philippines - Logistics Risk 7
SWOT 8

Market Size And Utilities Analysis 10

Market Size And Utilities Availability 10

Utilities Costs and Reliability 11

Table: Electricity Risks 11
Table: Fuel Risks 14
Table: Telecommunications Risks 16
Table: Water Risks 19
Transport Network Analysis 21

Extent and Quality of Transport Network 22

Table: Road Risks 23
Table: Rail Risks 24
Table: Ports And Inland Waterway Risks 26
Table: Air Transport Risks 29
Trade Procedures And Governance Analysis 31

Trade Procedures And Governance 31

Ease and Costs of Trade 32

Table: Export And Import Procedures 32
Table: Export And Import Procedures 33
Methodology 34

Logistics Risk Index Methodology 34

Table: Weighting Of Indicators (%) 35

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 Philippines Logistics Risk Report Published Date: 01 Jan 2018

BMI View: The Philippines exhibits a weak logistics profile due to its difficult topography , which poses considerable
logistics challenges. Transport and utilities networks are disjointed with various degrees of connectivity from island to
island , and they generally require considerable investment in order to meet the needs of supply chains and industries.
Congestions at the roads and ports further deter investors as they increase the time to import and export. Concerning
utilities, the Philippines benefit s from generally readily available fuel, electricity and water, but frequent shortages can
occur due to inadequate infrastructure. Costs are further exacerbated by the need to import energy, which is
vulnerable to price volatility. Overall, the Philippines scores 44.6 out of 100 in our Logistics Risk Index, ranking in 12
th position out of 1 8 countries in the East and South East Asia region.

Logisitics Score Dragged Down By Uncompetitive Transport Network

Philippines and Regional Average Logistics Risk

BMI Logistics Risk Index. 100= Lowest Risk; 0= highest risk

Transport Network ( 42.2 /100): The Philippines' transport network needs improvement to its infrastructure, as
both the quality and the extent are severely constrained by the fact that the country is comprised of a series of
islands. This leaves it reliant on ports and maritime transportation for the majority of its domestic freight, and
all of its international trade. The road and rail networks cannot span all the islands, and this not only results in
extensive congestion and deterioration in the quality of existing roads, but also poses risks of increased costs
and lengthy delays for investors involved in the logistics sector, the export supply chain, or firms reliant on
imported goods and materials. However, due to the Philippines's growing ties with China, we expect to see
high infrastructure-related investment from the regional giant in the next few years, which will improve the
sector as a whole and thereby reduce supply chain risks.

Trade Procedures and Governance ( 44.4 /100): Investors considering the Philippines have been deterred by the
somewhat lengthy times and high costs to import and export (when compared regionally), which are

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exacerbated by congestion at ports and on the roads. Liner connectivity is improving, although this is still
hampered by poor port infrastructure and the need for transhipment. Furthermore, the obstacles posed by
bureaucracy and customs compliance will continue to cause delays and keep trading costs elevated.

Utilities Network (47.1/100): The Philippines benefits from generally readily available fuel, electricity and water,
particularly in urban areas. However, inadequate infrastructure can lead to frequent shortages; quality of
these services also varies between the islands. The country also highly relies on imported energy, which
increases the risk of price volatility and disruption to the supply of electricity and fuel. Furthermore, although
growing, internet penetration continues to be low - meaning that businesses not only face a non-computer
literate workforce, but might also face costly outlays to connect to telephone and broadband lines.

Philippines - Logistics Risk

Trade Procedures And
Utilities Network Transport Network Logistics Risk
Governance
Philippines score 47.1 42.2 44.4 44.6
East and Southeast Asia average 54.4 54.3 54.5 54.4
East and Southeast Asia position (out
14 12 12 12
of 18)
Asia average 49.5 44.5 47.4 47.1
Asia position (out of 35) 20 16 18 16
Global average 49.3 49.0 49.6 49.3
Global position (out of 201) 113 114 111 113
Source: BMI Logistics Risk Index. 100 = Lowest risk; 0 = highest risk.

BMI's Operational Risk Index quantitatively compares the challenges of operating in 201 countries worldwide.
The index scores each country on a scale of 0-100, with 100 being the lowest risk state. The entire index
consists of 24 sub-index scores and 84 individual surveys and datasets, which all contribute to the headline
score. A full methodology can be found at the end of the report.

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Philippines Logistics Risk Report Published Date: 01 Jan 2018

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