Following the inclusion of the Philippine Economic Zone Authority (PEZA) and the economic zones in the latest credit rating assessment by Japan’s Rating and Investment Information Inc. (R&I) credit rating assessment, the agency is bent on contributing to government’s target of obtaining an A credit rating before the end of the Marcos administration in 2028.
Tereso Panga, PEZA director-general, said the agency will also strive to improve the Philippines’ ranking – from the current 8th – in the top promising countries for Japan to do business within the next three years.
R&I recently upgraded the Philippines’ credit rating to A- with stable outlook–the first credit rating upgrade under the Marcos, Jr.’s Administration where the country’s credit rating was raised from BBB+ with a positive outlook to A- with a stable outlook. Japan Credit Rating Agency Ltd. also scored the Philippines as A- with a stable outlook
Panga said PEZA has initiated talks with JJapan External Trade Organization (JETRO) and Japan Bank for International Cooperation (JBIC) for them to include more respondents from the ecozone investors in the next round of surveys for 2024 to boost the Philippines’ ranking.
In the gathering of samples for the respondent Japanese companies operating in a certain country, PEZA has noted both agencies have more respondents for countries like Vietnam, Indonesia, etc. which it said puts the Philippines at a disadvantage.
“We hope to improve our ranking as the preferred investment destination in the region. We are looking at the expansion of Japanese investors where they will bring in their supply chain partners to the Philippines,” Panga said.
He added the surveys greatly help in putting focus on the Philippines as being worthy of expansion and further investments.
“This will ensure as well the status of Japanese as consistently our biggest and long-term investor in PEZA,” Panga said.
He also expressed hope JETRO and JBIC will include other dimensions/factors to boost the Philippines’ attractiveness as an off-shore destination or as a manufacturing hub for Japanese companies.
Panga identified these factors as ease of doing business, credit worthiness, fiscal and investment incentives taking into consideration the proposed Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE More), availability and quality of labor, quality of life as an expat, logistics infrastructure, digital transformation, and sustainable development.
Both Jethro and JBIC survey reports for 2023 covering Asia and Oceania cited the following advantages and promising factors of the Philippines’ investment environment and as a manufacturing hub for Japanese companies: reduced linguistic barriers; low labor costs; promising market scale and growth potential; ease in recruiting general workers; tax incentives (corporate taxes/customs duties); base for supplies of assemblers and exporting to third countries; and, suitability for risk diversification to other nations.
Panga said together with the Department of Trade and Industry, the Office of the Special Assistant to the President on Economic and Investment Affairs and all investment promotion agencies, PEZA aims to attract more investments through the ecozone program “so we can contribute to the government’s target of average 6 to 7 percent GDP growth in the next four years and an `A’ credit rating before the end of the Marcos administration in 2028.”
“A high credit rating can send a strong signal of confidence to investors and creditors,” Panga said.
He said as ecozone locators, many of them are multinational corpororations and global industry leaders, are big and preferred clients of local and international banks, their ability to pay their loans and manage debts with the banks and creditors ultimately contribute to the country’s high credit rating.
According to R&I, the “Philippines is expected to experience steady growth and rising national income due to factors such as public and private sector investments, industries like business process outsourcing and favorable demographics, among others.”
