Source: The Philippine Star
MANILA, Philippines – The country’s trade and investment climate was seen as an obvious casualty with President Duterte’s constant verbal strikes against the international community early in his term.
But despite suffering major blows along the way, the country is ending 2016 with its trade and investment attractiveness intact.
With all the noise the Philippines was able to generate globally in just six months of the Duterte administration, growth prospects from the government and the private sector have remained rosy.
“It has really been a very encouraging year given the fact that with all the macroeconomic policies and all the programs we had, we were able to attract investments,” Trade Secretary Ramon Lopez told The STAR in an interview.
“There are really those who believed in the economy because bottom line, the fundamentals are there in terms of consumer base, fast growing economy, and you have 109 million Filipinos, plus the ASEAN ( Association of Southeast Asian Nations) market size. So there is a reason why they are investing in the Philippines. And we’re not changing policies. We are even strengthening the policies so definitely, it will just create a better business environment,” he added.
The Philippines is poised to head into the new year renewed, hoping the cuts and wounds brought about by the President’s controversial pronouncements the previous year would eventually heal.
“In a matter of months, things have changed. The United States all of a sudden has become a partner. There is a renewed friendship because of the good starting point of president-elect Donald Trump and President Duterte. He (Trump) complimented Duterte, saying he’s doing the right thing,” Lopez said.
Duterte early in his presidency has been clear and firm in his stance about aligning the Philippines with China. During a state visit in Beijing in October, the President announced his “separation” from the US.
Aside from the US, Duterte has also verbally assaulted the United Nations and the European Union for interfering in his war against illegal drugs.
“I believe the point there right from the start is the non-interference. You respect the policies and the campaigns we have,” Lopez said.
“All these concerns about the rhetorics are all gone. Even during those times when these issues on the rhetorics are at a high, yes some investors were indeed concerned and scared but when you look at the investors who are serious and true, they continued with their investment commitments,” the trade chief added.
Although it may be easy to dislike Duterte for his constant cursing and tough-talking, many in the business community, however, simply cannot help but admire his team’s economic agenda for the country.
“More than the political noises, if you concentrate mostly on the business agenda, how can you not support all these things? Lowering of income tax, ease of doing business, lifting of economic restrictions, and bigger infrastructure spending. So purely on that front, we definitely support this administration,” Management Association of the Philippines president Perry Pe said.
Pe said a massive infrastructure spending as planned by the current administration would be a key driving force for the economy, while lifting of economic restrictions would boost the country’s foreign direct investments (FDI) and job generation program.
The Makati Business Club (MBC) also shares the government’s optimism in the country’s trade and investment growth opportunities, as well as its overall economic expansion.
MBC chairman Ed Chua said the private sector would simply have to live with the President’s rhetoric in the years ahead.
“The rhetoric will be there, it will always be there. It’s politics. Our focus is on how we can work with the government in making this a better country, especially for the youth,” Chua said.
“We remain bullish about next year. We hope to continue to work with the government to continue to advocate for how we can make the environment her more conducive for investments so we can generate more employment,” the MBC official added.
The foreign business community, despite being among those hard hit by Duterte’s verbal tirades, continues to see huge potential in the Philippines. They are also impressed with what the Philippines was able to accomplish this year.
“The Philippine trade and investment climate ended stronger in 2017 for several reasons. The high growth domestic product (GDP) growth rate provided improved market opportunities for foreign goods in the Philippine market, especially from the country’s FTA trading partners. Also, the Philippine economy is attracting higher levels of FDI, now close to or above $6 billion annually since 2014,” American Chamber of Commerce of the Philippines senior advisor John Forbes said.
“The positive news is that while there has been political turmoil both domestically and abroad, the Philippine economy has weathered the storms and kept growing seemingly without being affected. This is a good sign as we move forward into 2017, not to mention a very strong signal to potential investors,” added Bo Lundqvist, president of the Nordic Chamber of Commerce of the Philippines.
Lundqvist said the business community also gives credit to the Aquino administration for the great job it has done in reviving the Philippine economy to what it is now.
“Certainly, the new administration under President Duterte had a strong foundation to start off with. I believe in the approach of the new administration, anchored on the 10-point agenda. I think the 10-point agenda is realistic, actionable, and can be an enabler of inclusive growth,” he said.
Of the 10-point agenda, Forbes said the policy to remove nearly all the restrictions on foreign investment was a “very welcome surprise.” He said this would level the playing field and increase competition to the eventual benefit of Filipino consumers.
“During the second half of the year, the incoming Duterte administration quickly set forth its 10-point socio-economic agenda and met with the business community in Davao. Finance Secretary Carlos Dominguez worked exceptionally hard to assemble a comprehensive tax reform package right at the beginning of the new administration, while Budget Secretary Benjamin Diokno set significantly higher spending targets for infrastructure in the 2017 budget. There are new efforts to reduce red tape, corruption, and citizens standing in line and to use the internet more for business and citizens to interteract with government. Led by DTI Secretary Lopez, new opportunities for trade, investment, tourism, and infrastructure funding were opened with China and potentially with Russia. Transportaion Secretary Tugade has much improved on-time departures at the Ninoy Aquino International Airport by restricting general aviation access,” Forbes said.
But despite the significant progress the country has attained this year, European Chamber of Commerce of the Philippines president Guenter Taus said the Philippine business environment remains challenging.
“These improvements are fairly satisfactory, but more can be done, and more has to be done – especially as the neighboring countries in ASEAN move forward quickly and we don’t want to see the Philippines lagging behind,” Taus said.
“The trade and investment environment can be further improved. At any rate, we remain optimistic seeing that the ease of doing business is high on the agenda of the Duterte administration. We are also happy to hear the President’s early pronouncements on liberalizing foreign ownership,” he added.
Coming into 2017, the business community wants to see less of the controversies and more of the action on the government’s end.
Among the issues business groups want addressed by next year are those concerning infrastructure, corruption, foreign market access, and ease of doing business.
“Given the developments in the Philippines in 2016, we hope for a continuous increase in fixed capital investments and ease of private and public investment. The continuous engagement of the Philippines with other countries in line with its other agreements in the ASEAN region is also an instrument to further open its market which should enhance trade and investment flows,” Taus said.