Finance Secretary Benjamin E. Diokno briefed business leaders on the Philippines’ as an investment destination in a recorded message to the 2023 European-Philippine Business Dialogue on May 25, 2023 at the Dusit Thani Manila.
The Dialogue brought together government officials, business leaders, and experts to discuss the country’s economic health and investment climate, as well as share insights on how to forge stronger economic ties between the Philippines and European Union (EU).
Secretary 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.
He also announced that on May 22, Fitch Ratings affirmed the country’s ‘BBB’ credit rating and revised its outlook to stable.
“This reflects strong investor confidence in the Philippines’ ability to honor its financial commitments while remaining resilient to external shocks,” Secretary Diokno said as he welcomed the country’s transition from a ‘negative’ to ‘stable’ outlook.
Policies to support investment-led growth and next steps
To create a favorable investment climate in the Philippines, the government passed structural reforms that create an enabling policy environment for public-private partnerships (PPPs).
These include the Build-Operate-Transfer (BOT) Law to strengthen the financial viability and bankability of PPP projects; the improved Investment Coordination Committee (ICC) Guidelines to ensure faster processing and approval of PPPs; the new Joint Venture (JV) 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,” Secretary Diokno said.
On top of this, the Philippines is now part of the Regional Comprehensive Economic Partnership (RCEP), which is the world’s largest trade agreement to improve market access and promote inclusive regional economic policies.
In line with this, the Finance Secretary expressed his desire to resume negotiations with the EU as the country’s major trade and investment partner, saying, “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 Free Trade Agreement [FTA] negotiations,” Secretary Diokno 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 coming into the EU market from vulnerable developing countries. It is a special incentive arrangement for sustainable development and good governance.
In 2021, total exports to the EU amounted to EUR 7.8 billion, 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,” Secretary Diokno said.