IT’s true, as the president of Metro Bank’s First Metro Investment Corp. said yesterday, “President Rodrigo Duterte’s decisive brand of leadership can help transform the Philippine economy into a global growth leader.”
FMIC President Rabboni Francis Arjonillo also said, “With the change in government and the promise of the Duterte administration’s decisiveness and action … the country is poised to become an emerging global frontrunner.”
Buoyed by this optimism, FMIC has upgraded its growth forecast for the entire 2016 to 6.5 to 7 percent from 6 to 6.5 percent.
The business community has welcomed Duterte’s pledge to spread development to the countryside. It is also pleased that the Duterte economic managers have announced their plans to increase infrastructure spending to 5 percent of GDP. This will mean more roads, bridges, ports, etc., which further means better conditions for doing business and more employment, therefore more money in people’s hands.
During the previous administration’s six years of rule, our country continued its unwavering pattern of growth established from the first years of former President Gloria Macapagal Arroyo.
The FMIC president said the Philippines’ strong fundamentals, its booming outsourcing sector, steady consumer spending and “high optimism over the new leadership of President Duterte” would further boost growth.
More foreign investments
What would really cause a steep rise in our economic growth is the entry of double or triple the foreign direct investments (FDIs) to our country. We are getting much less in foreign investments than, for example, our neighbors Malaysia and Thailand, but of course, much, much less than Singapore. The World Bank’s figures for 2015 show that Singapore received $65,262,633,426 and, Malaysia, $10,962,721,673 in FDI. Malaysia’s FDI is almost double our FDI of $5,724,215,604. Thailand’s $8,003,235,491 is $3,279,020,487 more than ours.
What the local businessmen and the world want to see is President Duterte making good on his promise to open Philippine doors wider for foreign investors.
A few days after he won the presidency in May, the President’s chief economic aide and longtime associate in politics and governance, Carlos Dominguez, said Mr. Duterte definitely wants to change the Constitution to lift restrictive foreign investment laws. This, Mr. Dominguez said, was a major part of Mr. Duterte’s plan to boost the economy.
The Duterte administration, he added, would “ensure the attractiveness of the Philippines to foreign direct investment by addressing the restrictive economic provisions of the Constitution.”
Insufficient investment—both domestic and foreign—has been making it difficult for the Philippines to grow industries, start large improvements in agricultural production and other needed inputs into the economy so that there will be enough jobs, more income and less poverty.
But foreign investors, some observers say, are turned off by Philippine constitutional provisions restricting foreign companies from owning more than 40 percent equity in certain businesses, including those requiring franchises granted by the Philippine Congress. These include public utilities and telecommunications.
However, several bold foreign businesses—like the Salim Group of Indonesia—in partnership with Filipinos, have come to own majority of the biggest Philippine firms, including utilities.
Nevertheless, the business community is waiting to see President Duterte and his people begin the work of getting the Constitution amended.