June 7, 2023
I thank the Philippine Franchise Association for organizing this event and gathering entrepreneurs from here and abroad to instill fresh dynamism to the Philippine economy.
It is my pleasure to be with all of you to share the strides we have made to bring the country back to its high-growth trajectory.
We entered 2023 from a position of strength and maintained this momentum into the first quarter.
At 6.4 percent, the Philippine economy outpaced major emerging economies in the region, including China, Indonesia, Singapore, and Vietnam.
The expansion was broad-based. All three major sectors grew: services, industry, and agriculture.
Growth in services was driven by wholesale and retail trade and financial and insurance activities. Growth in industry was supported by the robust performance of construction and manufacturing.
This supports the view that our 6 to 7 percent full-year growth target for 2023 is doable.
The international financial community shares this optimism. Two weeks ago, Fitch Ratings affirmed the Philippines’ triple-B investor-grade credit rating. And after two years, Fitch revised its outlook on the Philippines from ‘negative’ to ‘stable.’
This affirms the creditworthiness of the Philippines.
For the private sector, this means being able to borrow at lower costs to finance new investment or business expansions.
This also favors Filipino consumers and entrepreneurs in the sense that banks would then be able to lend money to them at lower interest rates.
All these translate into higher investments, as well as more and better quality jobs for Filipinos.
The high investor confidence is also reflected in our FDIs. In February, foreign direct investment inflows reached 1 billion US dollars – the highest FDI net inflows we have seen in 15 months.
This is a 13-percent increase versus last year’s level of 926 million US dollars and brings our year-to-date inflows to 1.5 billion US dollars.
The economy’s strong recovery is further supported by the steady improvements in our labor conditions.
The employment rate in March 2023 reached 95.3 percent – higher than last year’s level of 94.2 percent and the previous month’s 95.2 percent.
Unemployment is on a steady decline, from 5.8 percent in March 2022 to 4.7 percent this March 2023.
The quality of employment also displayed significant improvement, with underemployment dropping to 11.2 percent – the lowest since April 2005.
As the country’s top employers and industry leaders, I urge all of you to partner with the Philippine government in safeguarding these gains by nurturing our workforce. Do this by providing a fair, safe, and people-centered workplace where people’s skills and talents can fully develop.
Build up resilience and enhance operational efficiency by innovating your business models and embracing digital technology. The pandemic has made it clear that digitalization is not a matter of choice – it is a necessity.
On our part, I assure you that the administration of President Ferdinand Marcos, Jr. is determined to boost the economy’s growth through sound policies and prudent investments.
While we remain committed to a fiscal consolidation path as set in the Medium-Term Fiscal Framework, we are also committed to invest in high-impact projects that will deliver the greatest benefits to our people.
We will invest heavily in three strategic areas: human capital development, digitalization, and infrastructure development. Each one reinforces the other to create genuine social and economic transformation that is felt by all.
With its high multiplier effects, we plan to incur infrastructure spending of up to 5 to 6 percent of GDP, or between 1.3 to 2.3 trillion pesos every year until 2028.
We will invest in the development and upskilling of our human capital. It is, after all, our biggest asset – young, mostly English-speaking, and tech-savvy.
Developing a sound public-private partnership framework will help us address cross-cutting issues such as a weak competition environment and the digital divide. At the same time, it will boost our campaign to attract more and better investments to generate high quality and green jobs across the country.
Larger private sector participation in areas such as housing, transport, digitalization, and other big-ticket projects will also free up public funds for investments in human capital and welfare-enhancing programs.
Soon, we expect to reap the benefits of the structural reforms we have recently adopted. These include the amendments to the Public Service Act, Foreign Investments Act, and Retail Trade Liberalization Act; revised Renewable Energy Act IRR; and the passage of the landmark Corporate Recovery and Tax Incentives for Enterprises or CREATE Act.
These game-changing reforms will prove critical in our ongoing efforts to establish a business- and investment-friendly environment in the Philippines.
In addition, we are hoping for the swift passage of Package 4 of the Comprehensive Tax Reform Program or the Passive Income and Financial Intermediary Taxation Act, value-added tax on digital service providers, excise taxes on single-use plastics, and excise taxes on pre-mixed alcohol.
These measures are pending in Congress. We expect to implement them in 2024.
Just this May 29, the Senate unanimously approved the proposed Trabaho Para sa Bayan Act which establishes a national employment generation and recovery master plan over a 3-year, 6-year, and 10-year development timeline.
Under this measure, an Interagency Council shall be created to formulate the Plan. This contains action plans for supporting micro, small, and medium enterprises, worker upskilling and reskilling to improve employability and competitiveness, youth employment, and the reintegration of overseas Filipino workers, among others.
It will also encourage and incentivize employers and private sector organizations to offer technology training as well as knowledge and skills transfer geared towards improving the workforce.
All these lay the foundation for a modern, digitally-powered, forward-looking economy that is equipped to handle the demands of the 21st century.
The task of building a modern, inclusive, and investment-driven economy requires a whole-of-nation transformation and strong multi-sectoral cooperation.
We need you as our partners in realizing this vision. I urge you to rise up to the challenge with boldness and ingenuity, and redefine the way we do business in the Philippines.
Thank you.