Gearing the investment space for a soaring economy

By Bjorn Biel M. Beltran, Special Features and Content Assistant Editor

The Philippines stands at a critical juncture in its economic trajectory, poised to transition from lower-middle to upper-middle-income status in the fiscal year, according to many international financial organizations like the World Bank.

However, this optimistic outlook hinges on the nation’s continued development through structural reforms, and a strong commitment to long-term investments in human and physical capital. Courting foreign direct investments, which have dwindled in recent years, remains a key aspect in enabling this growth.

This was the theme of the first panel discussion of this year’s BusinessWorld Forecast 2025 forum, which revolves around “Gearing the Investment Space for Sustained Economic Growth.” The panel gathered industry leaders for their insights on the current investment climate in the Philippines and where investments have to be made to foster inclusive and sustainable growth.

The opportunities, of course, are abundant and evident. Erwin G. Pato, executive vice-president for treasury, finance, and planning at SM Investments Corp. (SMIC), believes the Philippines has immense untapped potential.

“The key challenge, really, is how to unlock that potential,” he said, emphasizing the need for collaboration between stakeholders, including government and private entities.

Mr. Pato called for a clear framework that investors can understand, which would foster inclusive growth and provide a road map for sustained development. In a short presentation, he likened SMIC to a proxy for the country’s economic trends and shared their strategy of leveraging diversification across key sectors such as infrastructure like logistics and renewable energy to capitalize on current growth opportunities while mitigating risks posed by external factors.

George S. Uy-Tioco, Jr., chief financial officer of GT Capital Holdings, Inc, echoed his sentiments, underscoring their confidence in the Philippines’ growth prospects, which remain strong and supported by robust domestic demand and continued public investment.

“In general, we are optimistic about the economy moving forward simply because we are growing, and we expect that growth to continue,” he said.

Yet, Mr. Uy-Tioco underscored the importance of strategic planning to manage potential headwinds. “The challenge is really how do we support that growth… How do we manage the potential headwinds that we anticipate in the years to come?”

These headwinds include geopolitical tensions, inflation, and the need to remain competitive in a rapidly evolving global economy. Most recently, China’s recent ban on exporting rare earth metals to the United States, signaling a global trade war that would disrupt supply chains and impact industries reliant on these materials like technology and energy.

For now, the Philippines has the time to react to such risks to its development, but not a lot of it. For Mr. Uy-Tioco, foreign investment is a critical piece of the puzzle.

“If this government is seen as sufficiently addressing these challenges and executing their solutions and programs in a timely fashion, then it will draw attention,” he noted, adding that urgency is crucial to leverage the country’s demographic edge effectively. “We need to think about five years from now, 10 years from now, and put our plans in place.”

Unlocking the nation’s potential

Cosette V. Canilao, president and chief executive officer of Aboitiz InfraCapital, Inc., pointed to infrastructure as a key driver of economic growth but advocated for a more holistic approach.

“When we talk about infrastructure, we don’t really talk about only the roads, the bridges, and airports,” she said. “We also talk about financial inclusion, technology, healthcare, and agriculture.”

Speaking from the perspective of Aboitiz InfraCapital, Ms. Canilao highlighted the private sector’s own pivotal role in supporting infrastructure development, emphasizing collaboration with the government to develop human capital.

“We are addressing different areas of infrastructure, all of us, and the private sectors need to engage with the government actively,” she explained. Streamlined processes and risk mitigation, she argued, would also make the Philippines more attractive to foreign investors.

Maria Carmela Laarni G. Felicidario, chief operating officer of Global Dominion Financing, Inc., agreed, pointing out the importance of marketing the country as an investment destination for both domestic and foreign investors. “Most of the foreign investors are just waiting for us to lower the risk of investing in us. They are waiting to lower their risk and expand their business with us,” she said.

Ms. Felicidario sees targeted efforts to reduce investment risks as key to unlocking funding for sectors critical to economic development. At the same time, making it easier for businesses, big or small, to expand will be crucial, as micro, small, and medium enterprises (MSMEs) account for nearly all (99.6%) of the business in the country.

She noted that this is based on Global Dominion’s own strategy for growth, which seeks to empower Filipino businesses, improving their access to financing, and foster transformative and impactful development.

In a similar vein, Alberto M. de Larrazabal, senior managing director, chief finance, and finance group head at Ayala Corp., pointed out that for the private sector aligning their business with national interests is key for long-term growth.

“The most recent thing is about financial inclusivity,” he cited as an example. “That’s one major pain point we wanted to address. Think about the fact that 70% of the population is unbanked and underserved. And it was a structural problem. Traditional banks could not service this segment of the market their needs given the transaction values they represent compared to the cost it would take to service them.”

This is how GCash came to be as successful as it is, as it utilized technology to serve public interest and capitalize on the opportunities that were there. And opportunities like these were everywhere.

Mr. Larrazabal then noted that the Philippines’ demographic dividend is its most powerful competitive edge. “Our people, their age, their capabilities — that is what will continue to provide us the opportunities as a country to grow to become one of the largest consumer economies in the region,” he said.

Nurturing this asset, however, requires significant investment in education and healthcare. He lamented the fact that 60% of Filipinos will never see a doctor in their lives, according to statistics from the Philippine Institute for Development Studies.
Ultimately, the consensus is clear: the Philippines has the tools, resources, and opportunities to achieve sustained economic growth. Most of all, the country has its people; and taking care of its people will be paramount if the country ever hopes to truly unlock its latent potential.