The administration of President Benigno S. Aquino III aims to implement stable economic policies, substantially reduce red tape and level the playing field. It is of the belief that government is an enabler and not an impediment to business.
It is the President Aquino administration’s thrust during its six-year term to reach for high growth, providing equal opportunities to Filipinos and foreigners alike, with an annual average of 7 to 8% from 2011 to 2016. This means more jobs and new opportunities to improve employment and, in the process, reduce poverty incidence.
Resilient and Fast-Growing Economy
The Philippines, one of the few countries that avoided a recession in 2009, grew 6.6% in 2012, the highest in Southeast Asia, at an average of 6% the last three years. Healthy economic growth is expected to be sustained with growth rates of 7-10% possible in the next 10 years. Better conditions in the global economy and economic outperformance in the Philippines’ key export markets in North Asia, which make up 36% of total exports, and ASEAN, at 16% of total exports, should pave the way for sustainable growth performance. The structure of the Philippine economy is similar to those of advanced economies, with consumption accounting for more than 70% of gross domestic product, a structure that investment-led economies are trying to emulate.
The Philippines’ recent investment grade status is a resounding vote of confidence affirming the Philippines’ strong economic and fiscal gains demonstrated by the following:
- On 27 March 2013, the Fitch group announced that they upgraded the status of the Philippines from BB+ to BBB-.
- On 2 May 2013, Standard & Poor’s also upgraded the country’s sovereign long-term foreign currency rating from “BB+” to “BBB-“ with stable outlook.
- On 7 May 2013, the Japan Credit Rating Ltd. revised its credit for the Philippines to BBB- from BB+, up one notch. The rating has a stable outlook.
A Clear Political Commitment to Fiscal Sustainability
The Aquino administration has made fiscal sustainability a top priority. The administration has a clear fiscal strategy for the medium term, which includes the following: a stringent tax enforcement to achieve national government tax effort of 18.1% by 2016; tight expenditure discipline to use public resources in the most efficient manner; sustainable deficits and healthy public finances; and prudent debt management.
The administration’s commitment to enforce tax collection is paying dividends:
The Philippines was removed from the Organisation for Economic Cooperation and Development (OECD) tax haven “grey list”, a recognition that it is now compliant with accepted tax standards.
The country also received a US$434million Millennium Challenge Corporation grant to provide additional funding for tax administration efforts and other initiatives such as infrastructure.
The Philippines contained the damage of the global financial crisis with respect to its fiscal accounts; deficits are manageable and debt level is sustainable. Proactive debt management reduced rollover risk and increased debt carrying capacity while minimizing foreign exchange risk and increasing self-sufficiency of funding.
Ensuring Enabling Business Environment Reforms
It is of the belief that government is an enabler and not an impediment to business. The administration aims to make the business environment ever more predictable, reliable and efficient, thereby improving the country’s international competitiveness to attract more investments. Among the focus areas are entrepreneurship and infrastructure development. In particular, it is important to ensure ease of doing business and improve infrastructure through enhanced implementation of the Public-Private Partnership (PPP) Programs.
Ease of Doing Business
DTI aims to streamline and simplify business registration requirements and procedures in the country. The Business Name Registration System (BNRS) drastically reduced business name registration time to within 15 minutes. The Philippine Business Registry (PBR), a web-based information technology system, aims to enable applicants to automatically obtain numbers from four other agencies: Bureau of Internal Revenue (BIR), Social Security System (SSS), Home Mutual Development Fund (Pag-Ibig Fund) and Philippine Health Insurance Corporation (Philhealth). The Business Permits and Licensing System (BPLS) is reformed at the local government level to improve the business permits and licensing systems of Local Government Units (LGUs) and reducing the steps, time, and signatories involved by adopting a unified business application form.
Public-Private Partnerships: Cornerstone Strategy of National Development
PPP programs help provide the foundations for growth. Infrastructure support facilities for tourism, agriculture, social services and growth centers are among the emphases of the Aquino administration. Incentives to stimulate private resources, ensuring competition, fairness and transparency, providing assistance in business feasibility, and a fast-track project approval process, eliminate much of the guesswork in the business process. Philippine Public-Private Partnership Center is the focal point for all interested in PPPs.
For more information on the Aquino administration’s proposition for growth and opportunity in business, please contact the Philippine Consulate General (ad honorem) in Armenia.