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Asia-PacificFebruary 7 2023

Philippines outlines five-year growth plan

The Philippines has announced an ambitious five-year plan to capitalise on strong economic results. Kimberley Long reports. 
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Philippines outlines five-year growth plan The Philippines expects to outstrip many of its regional neighbours with an estimated growth in GDP of 7.6% for 2022. Image: Getty Images

The Philippines has outlined ambitious plans for economic growth, riding on the wave of strong gross domestic product (GDP) figures from 2022. 

The country’s new administration under president Ferdinand Marcos Jr., colloquially known as Bongbong, has seen a period of economic strength since it came to power in June 2022. The country is expected to record GDP growth of 7.6% for 2022, ahead of government projections of 6.5%–7.5%: one of the highest growth figures recorded in the region. Additionally the unemployment rate was recorded at 4.2% in November 2022, lower than pre-Covid-19 pandemic levels.

The government has launched its Philippine Development Plan, a five-year programme spanning 2023 to 2028, aiming to support economic growth and keep inflation stable. Capitalising on 2022’s strong GDP figures, it targets growth of 6%–7% in 2023, and 6.5%– 8% from 2024 to 2028. Its inflation targets are 2.5%–4.5% in 2023, and 2%–4% for the 2024–2028 period. 

Trade and investment

Speaking at the Philippine Economic Briefing in London, officials from the Marcos administration outlined how they will meet their goals. The expansion of trade and exports is a key component – the country has removed its restrictions on trade imports, and on foreign investment in and ownership of domestic companies. 

Under the Philippine Foreign Investment Act 2022, foreign investors can own 100% of a company for the first time in services such as telecoms, shipping and railways. Public utilities, including seaports, electricity transmission and water pipeline distribution systems allow foreign equity participation of up to 40%. 

Under the country’s amended Retail Trade Liberalisation Law, the minimum paid-up capital for foreign investors has been lowered from $2.5m to $500,000. Requirements on net worth, retail branches and track record rules have also been removed. 

Felipe Medalla, governor of central bank Bangko Sentral ng Pilipinas (BSP), also at the event, said there is high domestically driven demand, and he expects exports to grow. This aligns with the government’s goal of strengthening the domestic economy in case of international shocks or a global recession. 

Digital money 

The digital agenda has also been identified as an accelerator for the economy, especially as it comes from a low starting point. 

Amenah Pangandaman, secretary of the department of budget and management, said: “Liberalisation has started. We will latch onto opportunities to really push forward the reform agenda. An aspect that presented itself during Covid was the need to be able to do things online. We need to push this forward, but digital is one of the more restricted sectors of the country with respect to investments.” 

The Philippines commissioned the World Bank in 2020 to produce the Philippines Digital Economy Report to compare the country’s performance with its Asean neighbours. The report found the country was behind its regional peers in internet access, with almost 60% of households without access to the internet. And although retail trade contributes around 20% of GDP, e-commerce transactions account for only 0.5% of sales. 

BSP is pushing towards the goal of 50% of all retail payments being made digitally in 2023, and for 70% of all adults to have a bank account. The BSP-supervised InstaPay consumer payments service saw the value of transactions increase to 3.54tn pesos ($65.67bn) during 2022, a 30.7% increase on the previous year’s figures. PESONet, also supervised by BSP but used for higher-value transactions, reached 6.41tn pesos, a 41.2% increase year on year. 

Infrastructure investment is also coming to the fore. In December 2022, the Maharlika Investment Fund was proposed, which will raise funds to support infrastructure projects. In order to meet its infrastructure goals, public-private partnerships (PPPs) are being encouraged. As at the end of December 2022, there were 297 PPPs at various stages of implementation, with a total value of 5.3tn pesos.

Further reports on the Philippines will be published in the March issue of The Banker and on thebanker.com.

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Read more about:  Asia-Pacific , Philippines
Kimberley Long is the Asia editor at The Banker. She joined from Euromoney, where she spent four years as transaction services editor. She has a BA in English Language and Literature from the University of Liverpool, and an MA in Print Journalism from the University of Sheffield. Between degrees she spent a year teaching English in Japan as part of the JET Programme.
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