THE Bangko Sentral ng Pilipinas (BSP) is committed to ensuring a favorable environment for foreign investors by achieving “price stability, a sound external payments position, financial stability, and an efficient payment system,” Governor Benjamin E. Diokno said.
He was speaking on the keys to fueling growth in foreign direct investment (FDI) at the 5th Joint Economic Briefing organized by the British Chamber of Commerce of the Philippines.
Such policy goals, he said, will “minimize external risk and provide resilience to shocks to the economy. This will help support an enabling environment conducive to economic growth and in turn investment opportunities,” Mr. Diokno said.
FDI net inflows dropped 15.1% year-on-year to $1.941 billion in the first quarter. The BSP attributed the decline to uncertainty generated by the US-China trade war, pre-midterm election worries, and the pending rationalization of investment incentives.
Despite the decline, FDI has been growing since 2010, Mr. Diokno said.
The BSP expects inflation to remain on target, with latest estimates pointing to a 2.9% average this year. Inflation in 2020 will be slightly higher at 3% due to a rebound in oil prices.
Mr. Diokno said the bank will also pursue foreign exchange reforms that will take into consideration the needs of the Philippines’ growing economy.
“The BSP is committed to implementing various foreign exchange liberalization reforms to make the country friendlier to investors and attract bigger and better FDIs both in value and quality,” he said.
Meanwhile, Mr. Diokno said he will also ensure that the BSP will strictly implement recently enacted laws such as amendments to the BSP charter, national payments system, the national identification system, and the gold law — which allows the BSP to purchase gold from small-scale miners free of excise and income tax.
“We stand ready to support the government’s efforts to further fuel FDI so that pursuing business opportunities in the Philippines will be mutually beneficial for investors and the domestic economy,” Mr. Diokno said.
Aside from economic fundamentals, Department of Trade and Industry Assistant Secretary Angelo B. Taningco said at the same briefing that the Philippines could take advantage of its demographics, which are among the youngest in the world.
“We also have Filipino workers that are hard-working, friendly, and easily adaptable. These are the things that are very crucial for investors in determining the long-term situation in the country,” Mr. Taningco said.
BDO Unibank, Inc. Chief Market Strategist Jonathan L. Ravelas said that potential investors in the Philippines should be told that its story is similar to what Thailand went through in the 1990s.
“It talked about building infrastructure, developing social capital and investment in their country’s biggest asset which is its people, and a concentration on opportunities to seize. That’s basically agriculture, tourism, and manufacturing,” Mr. Ravelas said in a panel discussion at the event.
Asked how the US-China trade war will affect the Philippines, Mr. Ravelas noted that the dispute would “actually be very good” for the country.
“We are a good takeoff point for these exports. The impact of the trade war is neutralized by the government’s infrastructure program. It’s providing a shield.” — Arra B. Francia