Despite domestic and external challenges, the Philippines is seen remaining resilient this year and sustaining its growth momentum, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said on Tuesday.
However, experts from multilateral lenders International Monetary Fund (IMF) and the World Bank reiterated the need for the government to improve foreign direct investment (FDI) flows as well as infrastructure while pursuing tax reform in the medium term.
While the country remained in a “position of strength,” Tetangco cited that among the global risks to economic growth included the slowdown in China as well as the continuous decline in oil prices, while the challenges being faced on the local front were the prolonged dry spell due to El Niño and infrastructure lack.
The BSP chief said the Philippines would nonetheless sustain its resiliency as the government had institutionalized reforms that would serve as a buffer and also ensure readiness of the banking sector as well as the economy as a whole for challenges ahead, including the Asean economic integration going in full swing.
Even the upcoming elections in May are seen minimally impacting on business confidence. “It will be business as usual,” Tetangco said.
IMF resident representative Shanaka Jayanath Peiris noted the Philippines’ “remarkable” growth during the Aquino administration, but also pointed out that FDI flows to the country, while “gradually improving,” remained “anemic” and low compared with its peers in the region.
Peiris blamed the foreign investment restrictions enshrined in the Constitution for the poor FDI performance. “The service sector is protected, lacking competition. The Philippines is one of the most restrictive to FDI. This is something to look at in the medium term, so we can open more sectors,” he said.
The IMF official said the country has natural endowments such that the sectors of agribusiness, mining and tourism brim with potentials.
However, barriers to increased investments as well as more robust trade include gaps in infrastructure and logistics as well as nontariff barriers, Peiris said.
In the case of infrastructure, the Philippines’ was “not only low in quantity but also quality,” he added.