Philippines to sustain reforms amid leadership change

MANILA, Philippines - Standard & Poor’s (S&P) and business group US-Philippines Society are optimistic key economic reforms implemented under the present administration are likely to be maintained after President Aquino steps down on June 30.

S&P sovereign debt committee chair John Chambers told participants of the Philippine Business Investment Forum (PBIF) held in New York City last March 3 the next set of leaders are likely to keep the reforms implemented by the Aquino administration.

“Our assumption is that change in leadership is unlikely to reverse the economic reforms in the Philippines,” Chambers said.

Legislative and administrative reforms over the past six years are credited for helping the Philippines achieve economic milestones, including investment grade sovereign credit ratings and leap in the country’s rankings in various global surveys on competitiveness.

Among the major legislative reforms are the Sin Tax Reform Law, the Foreign Banking Liberalization Act, amendments to the Cabotage Law, the Tax Incentives Management and Transparency Act, amendments to the charter of Philippine Deposit Insurance Corp., GOCC Governance  Act of 2011, and the Philippine Competition Act.

The legislative reforms are meant to help institutionalize sound policies that promote business and economic progress.

In addition to the legislative measures are key administrative reforms, including those that rationalize and make more transparent the budget process, strengthening of the public-private partnership (PPP) program, enhancement and modernization of the procurement processes for better transparency, and initiatives that expands the taxpayer base for improved revenue collection.    

Chambers said S&P does not see the pending change in leadership disrupting the favorable credit standing of the Philippines. Whoever wins the presidential election in May is unlikely to initiate a reversal of the existing economic and business policy environment, which has proven beneficial for the Philippines, Chambers said.

S&P currently assigns the Philippines a rating of “BBB,” which is a notch above the minimum investment grade, with a “stable” outlook.

Retired Ambassador John Maisto, president of the US-Philippines Society, echoed the same sentiment.

“Any incoming administration is expected to keep the good economic policies,” Maisto said.

He said all of the presidentiables seem to embrace the same overall economic agenda of the Aquino administration, except that their styles in pursuing the same goals could be different.

Maisto said the attractiveness of the Philippines as an investment destination is not affected by the pending leadership transition.

The Philippines is said to have one of the greatest economic stories recently, evolving from the “sick man of Asia” to “a bright spot in the region.”

It posted an average gross domestic product (GDP) growth of 6.2 percent from 2010 to 2015 amid a benign inflation environment to become one of the world’s fastest growing economies at a time of global economic challenges.

With sound macroeconomic fundamentals combined with its strong external payments position, the Philippines is now a net creditor to the International Monetary Fund (IMF), turning around from previously being a net borrower.

The PBIF was graced by business leaders and experts from the local and international financial community as well as top economic officials led by Finance Secretary Cesar Purisima, Philippines Competition Commission chair Arsenio Balisacan, Agrarian Reform Secretary Virgilio delos Reyes, former Trade secretary Gregory Domingo, BSP Deputy Governor Nestor Espenilla Jr., and Tourism Undersecretary Benito Bengzon Jr.

The PBIF was an initiative of Philippine Ambassador to the US Jose Cuisia Jr.