The government’s growth target for the year remains “doable,” according to the country’s finance chief said.
The Development Budget Coordination Committee (DBCC), however, is set to meet later this month to review if there is a need to revise its assumptions.
“This year, the government expects the economy to grow between six and seven percent. And while slightly lower in recognition of the expected global slowdown, this target remains high but doable,” Finance Secretary Benjamin Diokno said at the Philippine Economic Briefing held on the sidelines of the World Bank-International Monetary Fund Spring Meetings.
“The current business environment indicates that we are on track to achieving this goal. Despite inflation and external headwinds, overall business outlook is more upbeat,” Diokno said.
During the press briefing, Budget Secretary Amenah Pangandaman said the DBCC will meet on April 23 to take a look at its projections.
“When we return, we’re going to sit down, maybe we’ll revise our figures and estimates by then,” Pangandaman said.
Diokno made it clear to US investors during the briefing that infrastructure spending is front and center of the government’s growth strategy.
“We are committed to reverse the decades-long underinvestment in infrastructure: from 2001 to 2015, average infrastructure spending was only at two percent of GDP,” he said in his keynote speech.
Diokno said the government is determined to sustain high infrastructure investment for the next six years through the public-private partnership (PPP) mechanism, which will enhance energy, logistics, transportation, telecommunications and water infrastructure in the country.
“The spectrum of industries that foreign investors can participate in has grown wider than ever before. The economic liberalization measures that the Philippine government has enacted in recent years have opened up key high-growth sectors to international participation,” Diokno said.
The amendments to the Retail Trade Liberalization Act, Foreign Investments Act and the Public Service Act relaxed foreign restrictions on investments in the country.
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, the Department of Finance said.
The agency highlighted the Philippines also offers a simpler and more effective fiscal incentives system that is performance-based, time-bound, targeted and transparent through the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.
From August 2021 to December 2022, total investment capital from approved priority activities with incentives under CREATE has reached P414.3 billion. This covers priority activities with a project cost of above P1 billion.
“We invite you to take a look at our Strategic Investment Priority Plan, which identifies priority industries, projects and activities that can be granted fiscal incentives under the CREATE Act,” Diokno told delegates of the meeting.
Ndiamé Diop, World Bank country director for the Philippines, agreed that opening up key sectors to investment is a significant move for the Philippines.
“It has been recognized that in the context of (the) Philippines, the speed, the scale and the impact of the infrastructure push would be limited if you don’t open up very key sectors, infrastructure sectors, to all investment, all type of investment including foreign direct investment. In fact, the investment regime of the Philippines has for a long time been one of the most restrictive in the region,” Diop said.
For his part, National Economic and Development Authority Secretary Arsenio Balisacan underscored several factors which made the Philippines a more attractive investment destination, including, among others, rapid and sustained economic growth, the country’s young, vibrant and growing working-age population, and recent structural and regulatory reforms aimed at improving the business climate for international investors.
“The Marcos administration has aggressively pursued several initiatives aimed at encouraging greater local and foreign investment and private-sector participation in infrastructure development,” the country’s chief economist said.
Balisacan also assured investors of the country’s commitment to infrastructure development by discussing the 194 infrastructure flagship projects (IFPs) recently approved by the President, which are worth a total of approximately $165 billion.
“IFPs shall be prioritized in the government’s annual budget preparation and shall enjoy the benefits of expedited approval processes consistent with current legal frameworks. Notably, the majority of these infrastructure flagship projects focus on physical connectivity and water resources. We are committed to creating a more competitive investment environment,” he said.
