Finance Secretary Carlos Dominguez III has showcased before Japanese investors the Philippines’ “brightening economic prospects” supported by a strong financial position and the Duterte administration’s game-changing initiatives, urging them to take part in the country’s shift to a “new and better” post-pandemic recovery.
“The Philippines is more than ready for a new and better normal,” said Dominguez in stressing that business partnerships with Japan from hereon can be strengthened in the areas of infrastructure development, manufacturing, digital technology, renewable energy (RE) and research and development (R&D) activities.
“We have gone through a difficult episode and proved that our institutions are strong enough to keep our people safe and prosperous. We have laid down firm foundations to ensure a stable recovery towards a more inclusive economy. We have what it takes to do this,” Dominguez said during Wednesday’s virtual Philippine Economic Briefing (PEB) attended by key government officials and business leaders from Japan.
He said these gamechangers in the country’s business landscape include the fast-tracked digitalization program across the Philippine bureaucracy; the timely passage of the corporate income tax (CIT) reform law; the establishment of a national ID system; measures to further improve the ease of doing business; the sustained modernization of the country’s infrastructure under President Duterte’s signature program “Buld, Build, Build;” and the government’s ambitious plan to adapt to, and mitigate the impact of, climate change, Dominguez said.
With COVID-19 infections now declining at a steady rate amid the Philippines’ scaled-up vaccination drive, Dominguez reiterated the economic team’s earlier assessment that a full reopening of the economy can happen by the onset of the New Year.
Dominguez thanked the government and people of Japan for helping the Philippines battle the pandemic, through their budgetary aid and donation of 1 million doses of AstraZeneca vaccines.
On top of being the Philippines’ biggest provider of official development assistance (ODA), he noted that Japan has also been a strong supporter of “Build, Build, Build” through 26 ongoing loans that cover various big-ticket projects, including the country’s first-ever underground rail system—the Metro Manila Subway.
Despite COVID-19, annual foreign direct investment (FDI) inflows from Japan did not drop but even increased by 45 percent compared to the pre-pandemic period, making it the Philippines’ second largest source of FDIs under the Duterte presidency.
Japan is also the Philippines’ top export market, he said.
“All of these facts show how Japan has become a valuable partner in our development story. We are optimistic that Japan will continue to play a key role in our economic resurgence,” Dominguez said.
Dominguez said he expects the 7.1-percent growth of the economy in the third quarter, along with the FDI surge, sound financial position and continued fiscal discipline, to lead to a better gross domestic product (GDP) performance in the year’s final quarter.
“With brightening prospects for the economy, we expect to do even better in the fourth quarter as we continue to relax mobility restrictions,” he said.
In inviting Japanese investors “to be involved in (the Philippines’) game-changing undertakings” Dominguez cited the government’s measures to transition to a digital economy, such as the use of electronic channels by the main revenue-generating agencies to enable them to overshoot their collection targets, and the migration of transactions online to develop broad-based and inclusive capital markets, such as those initiated by the Securities and Exchange Commission (SEC) and the Bureau of the Treasury (BTr).
Dominguez also underscored the timely passage of the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) that now offer businesses the biggest stimulus package ever to help them recover from the pandemic; and that modernized the fiscal incentives system to encourage more high-value and job-generating investments and innovation into the country.
“With CREATE, we see opportunities to strengthen investment and business partnerships with Japan especially in the areas of manufacturing, digital technology, renewable energy, and research and development activities,” Dominguez said.
He said CREATE complements the other reform efforts initiated by the Duterte administration to make the Philippines more business friendly.
These include the Anti Red-Tape Act (ARTA) and Ease of Doing Business Act (EODB) plus “Build, Build, Build” and the establishment of a National ID system, among other measures.
The Philippines will take full advantage of its demographic “sweet spot,” where its young and talented population means a workforce prepared to swiftly adjust to the transformations taking place in the economy around the world, Dominguez said.
He said the remaining period of President Duterte’s term will be focused on rapidly modernizing governance and accelerating the rollout of the infrastructure program.
“The modernization of our infrastructure should open many opportunities for Japanese businesses looking at the region for expanding their operations,” Dominguez said.
Dominguez said the Duterte administration will also continue to push in the Congress the passage of economic liberalization bills and the remaining packages of the tax reform program covering property valuation and passive income and financial intermediaries.
He urged entrepreneurs to maximize the impact of these business-friendly measures by shifting other sustainable practices to the circular economy .
For its part, the government has started undertaking practical actions to fight climate change, such as launching its Sustainable Finance Roadmap; pushing a ban on single-use plastics; partnering with the Asian Development Bank (ADB) to accelerate the country’s transition from coal to clean energy; finalizing a framework for the issuance of the Philippines’ first-ever sovereign green bonds; and tapping the expertise of Filipino experts to engage Filipinos living in climate-vulnerable communities in preparing them to execute localized and practicable action plans, Dominguez said.
He cited the Philippines’ increasing FDIs, growing remittance inflows from overseas Filipino workers (OFWs), ample international reserves, stable exchange rate and rising revenue collections as indicators of an economy on the way to a strong recovery.
“After so many challenging months, the numbers are now all in our favor,” Dominguez said.
Dominguez also cited the country’s solid fiscal position under the Duterte administration, which is reflected in its sustainable debt-to-GDP ratio, high credit ratings, successful Samurai and other bond issuances amid the pandemic, to name a few, as the other factors that will drive the country’s strong economic rebound while it ramps up vaccinations against COVID-19 “to roll back this pandemic for good.”