It has also focused on pushing through reforms, such as the 2017 Tax Reform for Acceleration and Inclusion Act. This revision of the tax code aims to make the system simple and fairer, and includes new revenue-raising measures that are designed to help fund the Government’s infrastructure program.
“Duterte has courted foreign investors, particularly in infrastructure, as part of a broader attempt to strategically rebalance the Philippines’ economy,” says Kurlantzick. “A lot of that investment has not come through yet, but they are clearly trying to woo more smart investment from China.”
Rani Peyra, Country General Manager for Goodyear Regional Business Services in the Philippines, believes there is more that could be done to encourage FDI.
“To keep the momentum going,” she says, “I believe the Government should continue to foster good relationships with investing countries, invest more effort in promoting its international branding, closely manage cost related to manufacturing and production such as electricity and wages, and improve infrastructures to reduce transportation cost.”
Despite the outreach to foreign investors, prominent investors active in the Philippines caution that some restrictions remain. They highlight issues in government effectiveness; for example, some Build, Build, Build projects have faced bureaucratic and procedural obstacles.
There are also economic problems to deal with, including rising inflation, growing public debt and a trade deficit, with some commentators suggesting that the country needs to develop new industries to remain competitive internationally. There are also wide disparities in income and growth between the country’s different regions and socioeconomic classes.
But Naoto Tago, President and CEO of Japan’s Marubeni Philippines Corporation, believes there is scope for more investment from Japan, especially in manufacturing, focused on semiconductors and electronics.
“The Philippines is an attractive country for foreigners to make an investment,” he says, highlighting the abundant, well-educated labor pool. “The country has such rich human resources and the mastery of English is a big factor for Japanese businesses looking to come here. That’s why business processing outsourcing (BPO) is a possible sector to look into, and why the Philippines is so competitive with the international BPO sector.”