Razon cites Trump as 'biggest' threat to global trade
Philippine port operator braces for sluggish growth, trims overheads
CLIFF VENZON, Nikkei staff writer
MANILA -- President Donald Trump is the biggest threat to world trade growth, according to Enrique Razon, the chairman and president of International Container Terminal Services of the Philippines.
Razon described the U.S. president to reporters as "by far -- probably the only -- risk" to trade expansion during a shareholders' meeting on Thursday.
Trump aborted the Trans-Pacific Partnership trade agreement as promised after entering office in January, and has indicated his interest in renegotiating the North American Free Trade Agreement. He has also advocated taxing U.S. companies that have moved production abroad.
Trump's failure to amend health care laws as promised has, however, raised questions about his ability to effect changes unilaterally.
Razon said it is unclear what can be done about Trump's protectionist inclinations, but for now ICTSI continues to add terminals around the world. The company qualified on Friday to bid for a port in Thessaloniki, Greece, with the final round of auction possible in three months. It is also looking at several projects in Africa
ICTSI ended contracts in Brunei and the U.S. in the last quarter, and currently runs 28 terminals around the world. It handled 8.69 million twenty-foot equivalent units in trade volume last year, up 12% from 2015. Revenues from port operations grew by 7% to $1.13 billion, while net profit tripled to $180 million due to lower one-time charges in 2016.
Razon said the company plans to control costs to boost earnings while trade remains sluggish, and may reduce its workforce further if necessary. In Brazil last year, there were some layoffs due to lackluster operations.
ICTSI is also cutting investment. For 2017, it plans capital expenditure of $240 million, lower than the $353.5 million spent in 2016. Razon said part of the reason for the reduction was the completion of projects in Australia, Colombia, the Democratic Republic of Congo, and Iraq.
The World Trade Organization is forecasting global trade expansion of 2.4% in 2017 within the range of 1.8%-3.6% due to "deep uncertainty about near-term economic and policy developments". The forecast range for 2018 is better at 2.1%-4%.
Razon warned that the presidential election in France could have a further detrimental effect on the European Union following the U.K.'s decision to quit after a referendum last year.
"So far it is not a pretty picture, but these are all opportunities," said Razon.