Philippine economy on an upward trajectory

Wick Veloso and SSS president and CEO Rolando Macasaet. We have had numerous economic briefings in Washington in the past, but I must say that the one we held last Wednesday was the best I have ever seen in all my years, as the presentations highlighted the Philippine economy to be dynamic, as well as responsive and adaptive to challenges and opportunities.

There is no doubt that our security alliance with the US played a key role, but it is clear that ensuring economic security is equally critical in order to build a resilient and inclusive economy that will strengthen both the Philippines and the United States. Solidifying our alliance through more trade and investments can increase commerce, empower our people and ensure a peaceful, secure and prosperous environment for all of us.

In his presentation, Secretary Diokno emphasized that infrastructure spending is front and center of the Philippines’ growth strategy, with the government committed to reverse the under-investment in infrastructure that has been going on for more than a decade, averaging at only two percent of gross domestic product (GDP) growth.

This focus on infrastructure spending was echoed by Budget Secretary Amenah Pangandaman, who disclosed that the Philippines is determined to maintain infrastructure spending at 5-6 percent of GDP in the medium term, knowing full well that infrastructure is “the backbone of the economy.”

American investors were also pleased to know that the bulk of the administration’s infrastructure budget is aimed at improving physical connectivity throughout the Philippines through the construction of accessible road networks, railways, buildings and flood control infrastructure, among many others.

Improving the country’s digital infrastructure was also a priority as this will help ensure that the Philippines continues to be a viable investment destination, with P24.13 billion or $434.3 million allocated to accelerate the country’s digital transformation, Secretary Pangandaman disclosed.

Secretary Diokno also bared that the “economic liberalization measures that the Philippine government has enacted in recent years have opened up key highgrowth sectors to international participation,” outlining the reforms such as the amendments to the Retail Trade Liberalization Act (RTLA), Foreign Investments Act (FIA) and the Public Service Act (PSA) that relaxed foreign restrictions on investments in the Philippines.

“Companies engaged in solar, wind, hydro and tidal energy are also welcome to invest in the Philippines’ renewable energy sector now that it has been opened up to full foreign ownership,” Secretary Diokno told the businessmen present.

As I explained to the attendees, our economic managers, in partnership with the legislature, the private sector and other stakeholders, are making changes to improve infrastructure and establish game-changing measures that will facilitate not only more economic activities for the Philippine business sector but also more foreign investments. But what struck me most during the briefing were the extemporaneous remarks of Ndiamé Diop, the World Bank’s Country Director for the Philippines, Malaysia, Thailand and Brunei. In my experience as a news reporter, I know for a fact that when a person speaks extemporaneously, it means that he has real knowledge on what he is talking about, compared to someone who totally reads from his prepared remarks.

Mr. Diop noted the Philippines’ “remarkable growth story” and how it rebounded very strongly from the Covid-19 pandemic with 7.6 percent growth. He agreed with the interconnected structural reforms mentioned by Secretary Diokno, adding that “prudent macro-fiscal and macro financial management” is also behind the resilience of the country’s growth and macro stability.

The country’s push for infrastructure could really accelerate the transformation of the Philippine economy in the next decade. Recalling a World Bank analysis almost a decade earlier showing that productivity loss due to lack of infrastructure was around $54 million every day or about $80 billion a year, lifting the infrastructure spending to 5 percent is therefore a “game changer,” the WB executive said. He also noted that the investment regime of the Philippines has for a long time been “one of the most restrictive in the region,” but what the government has been doing over the last few years to open up these infrastructure services to foreign direct investment and all types of investment is “very significant.”

We are the fastest growing economy right now in our part of the world, a fact affirmed by many, including the IMF that expects the Philippines to record the fastest economic growth in Asia. Having ended 2022 with the fastest growth in the last 40 years, things are really looking good, especially with the recently concluded 2+2 Ministerial Dialogue that has made American investors feel more reassured due to the strengthened relations between the Philippines and the U.S.

As I told the briefing attendees, investing in the Philippines is both a smart and strategic economic decision. By supporting the growth and development of our country, they are contributing to the stability and prosperity of the region. (Philstar.com)

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