By Rea Cu & Catherine N. Pillas
The Duterte administration’s push for greater integration with Asian economies is seen to lead to substantial investment inflows for the country this year, starting with P326 billion worth of projects, as well as rapid tourism growth and robust exports, according to the Department of Finance (DOF).
During the Philippine Chamber of Commerce and Industry (PCCI) general membership meeting held at the Makati Diamond Residence on Wednesday, Finance Secretary Carlos G. Dominguez III pointed out that an estimated P326 billion worth of projects that have begun construction, or will be built starting this year, are among the investments that will lead to the “blossoming of opportunities for Filipino businessmen”.
According to the finance chief, as the country shifts its source of growth from consumption to investments-led, one factor that needs to be addressed is improving the country’s low savings rate as 86 percent of Filipinos remain “unbanked”.
“To be an investments-led economy, we need to improve our savings rate. The key to this is the deepening of the country’s capital markets and the broadening of access to the formal business sector,” Dominguez said.
Businesses are expected to be busy starting this year, as the Duterte administration rolls out its big-ticket infrastructure projects, with an aim to stimulate the economy, create jobs and generate more financing opportunities for the country’s banking and insurance sectors, according to the DOF.
“It is not only the large businesses that will benefit from the multifold opportunities that will open up in the near future. Our closer relationship with China, Japan, South Korea and the Asean will translate into rapid tourism growth and bountiful export markets. This will mean stronger demand for processed food, in-person service enterprises, household items and consumer electronics,” Dominguez added.
The large-scale infrastructure projects that will start this year include the Clark-Subic Rail, Tutuban-Clark Rail and the 581-kilometer South Line of the North-South Railway Project connecting Tutuban, Calamba, Batangas and Bicol. Construction has also begun on the Panguil Bay Bridge in Mindanao, while groundbreaking rites are set this year for the Clark International Airport, the Metro Manila Bus Rapid Transit System and three bridges across the Pasig River, two of which will be built through Chinese grants.
“I am well aware that the congestion at the ports imposed heavy costs on our manufacturers, especially those whose competitiveness depends on just-in-time deliveries of both raw materials and finished products. The congestion is both an infrastructure and administrative problem. As we upgrade our port infrastructure, we should also remove unnecessary procedural hindrances to the flow of goods,” Dominguez said.
Beyond 2017, the Duterte administration will start the construction of long-span bridges between Bicol and Samar, and between Leyte and Surigao, which will finally make land travel between Luzon, the Visayas and Mindanao possible, he added.
Regional airports will also be rehabilitated, or new ones will be built, to ease travel across the country’s three island groups, while in Mindanao, a 2,000-km railway that will connect its key cities and boost the economies of the country’s poor regions is also in the pipeline.
“When I said we will start these projects, we do not mean just bidding out projects, signing contracts, or attending opening ceremonies. In this administration, start means groundbreaking and actual construction. We will no longer tolerate the wishy-washy promises that implementing agencies have been accustomed to making in the past,” Dominguez said.
The Duterte administration, he said, is also committed to address other factors that have made the Philippine economy less attractive to investors, such as its high energy costs, restrictive economic policies, corruption and uncertainty over contracts.
“You can count on this administration to be aggressive in building these infrastructure,” he added.
Cross-border trade
Intra-Asean trade is expected to significantly increase, and linkage between the regional bloc’s micro, small and medium enterprises (MSMEs) with Asean and global multinational enterprises (MNEs) to further strengthen.
An Asean investments committee agreed to push an action agenda to facilitate cross-border trade. The Asean Coordinating Committee on Investments (CCI) met in Manila recently and agreed to make the Focused and Strategic Action (FAST) Action Agenda on Investment as among the its priorities for the year.
The FAST Action Agenda includes among others:
Asean-wide assessment of the outstanding issues on Trade Related Investment Measures (TRIMS). In this area, the committee will come up with a document identifying the TRIMS plus elements that Asean may commit and adopt as a common Asean negotiating strategy.
MSMEs’s link with MNEs, where the key outcome are possible letter of intents (LOIs) and business collaboration between these MSMEs and MNEs.
For this year, the Philippine will host a mission from Asean, and will be conducting a conference and business meetings will be undertaken.
“Our goal is to showcase MSMEs as possible suppliers of products and services to MNEs. As we encourage them to strategically enhance their productivity, we will open up more opportunities for them to participate in the regional and global value chains,” said Board of Investment Executive Director Ma. Corazon Halili-Dichosa, serving as the Philippine Head of Delegation to the CCI, in a statement.
During the committee’s meeting, Philippines committed to host a conference for MSMEs and MNEs from all over the region.