Philippines has edge as haven for investments – DOF

MANILA, Philippines — The government has highlighted the edge of the country as an investment destination as it pushed for the resumption of free trade agreement (FTA) talks between the Philippines and the European Union.

During the 2023 European-Philippine Business Dialogue, Finance Secretary Benjamin Diokno outlined the country’s latest accomplishments and policies with hopes to attract European trade and investment that will further drive the Philippines’ regional and global competitiveness as an investment destination.

Diokno also cited the decision of Fitch Ratings to revise the Philippines’ credit rating outlook to stable from negative and affirm the BBB investment grade rating of the country during the dialogue that brought together government officials, business leaders and experts to discuss the country’s economic health and investment climate.

“This reflects strong investor confidence in the Philippines’ ability to honor its financial commitments while remaining resilient to external shocks,” he said.

According to the Department of Finance (DOF) chief, the policies and next steps to support investment-led growth include structural reforms that create an enabling policy environment for public-private partnerships (PPPs) as well as the country’s participation in the Regional Comprehensive Economic Partnership (RCEP).

To improve the Philippines’ investment climate further, reforms include the Build-Operate-Transfer Law to strengthen the financial viability and bankability of PPP projects; the improved Investment Coordination Committee guidelines to ensure faster processing and approval of PPPs; the new joint venture guidelines to strengthen checks and balances, and the pending PPP Act to promote competition and protect public interest.

“We are expecting an influx of investments from the implementation of structural reforms we passed in recent years. These are the amendments to the Public Service Act, Foreign Investments Act and Retail Trade Liberalization Act, along with the landmark Corporate Recovery and Tax Incentives for Enterprises or CREATE Act,” Diokno said.

On top of this, he said the Philippines is now part of RCEP, which is the world’s largest trade agreement to improve market access and promote inclusive regional economic policies.

Diokno also expressed his desire to resume negotiations with the EU as the Philippines’ major trade and investment partner.

“Geo-economic fragmentation and trade protectionism will only burden an already struggling global economy. That said, now is the time for us to resume the Philippines-European Union FTA negotiations,” he said.

The Philippines has been enjoying greater market access to the EU that led to a significant increase in exports since its successful application to the Generalized Scheme of Preferences-Plus (GSP+) in 2014.

The EU GSP+ removes import duties from products entering  the EU market from vulnerable developing countries. It is a special incentive arrangement for sustainable development and good governance.

In 2021, Philippine exports to the EU amounted to 7.8 billion euro, with GSP+ utilization growing to an all-time high of 76 percent that same year.

“The FTA will be an ideal platform to optimize the benefits of the large EU market and a permanent mechanism to fuel our economic relations,” he said.