Philippine economy: DC talk of the town

Following the successful International Monetary Fund (IMF) and the World Bank Group (WBG) Spring Meetings in Washington, D.C. that gathered bankers, finance ministers, businessmen as well as representatives from civil society organizations, a main topic of conversation now among US business groups is the Philippines – the fastest growing economy in Southeast Asia and the second fastest in the world after India.

No less than the IMF made this forecast in the latest World Economic Outlook it released, projecting a growth rate of 6.7 percent for 2018 and 6.8 percent for 2019 as the Philippines remains resilient to external shocks.

Over the years, the partnership between the Philippines and the IMF has been very good. The international organization has provided technical assistance that has helped strengthen our financial institutions. In 2006, the Philippines paid its debts to the IMF and later on achieved creditor status.

In 2009, the Philippines contributed $4.55 billion for an Asian crisis buffer fund of $120 billion known as the Chiang Mai Initiative Multilaterization. In 2011, it extended loan support through the IMF’s Financial Transactions Plan by making $251.5 million available to help out European economies that were in distress such as Greece, Ireland and Portugal.

In November last year, the Bangko Sentral ng Pilipinas (BSP) said it is extending a $1-billion loan support to the IMF to help other economies going through financial difficulties and contribute to the stability of the international monetary system. Given its sound macroeconomic fundamentals and strong external position and as a member of the global community, the Philippines has seen it fit to lend to the IMF so the latter can lend to other nations that need the resources, the BSP said.

Senator Loren Legarda and Budget Secretary Ben Diokno were both in Washington, D.C. for the Spring Meetings, and I together with the embassy staff hosted them. During the dinner I hosted, Secretary Diokno was pleased to share with us the Philippines’ 6.7 percent growth last year and the projected 7 percent growth as the talk of the town.

I accompanied Loren and Ben to a meeting with IMF managing director Christine Lagarde, where Secretary Diokno and Senator Legarda gave a briefing about the government’s efforts to reform the budget process and address chronic underspending that impact on infrastructure development.

Senator Loren, chairman of the Senate committee on finance, has a very good relationship with the IMF chief whom she met back in 2012. Lagarde was very pleased with the way the Philippines has been conducting its disaster preparedness program, and pledged the IMF’s continuing support and assistance to the efforts of the Philippines to achieve sustainable and inclusive growth.

Even the Asian Development Bank (ADB) said the Philippines is entering the “golden age for economic growth” during the launch of its 2018 Asian Development Outlook, citing high domestic demand, rising remittances, higher employment, increased public spending on infrastructure as well as strengthening private investment that would fuel growth in the next few years, supported by a sound economic policy setting.

Secretary Diokno who has worked with four presidents says the stars are really aligned with us this time, now that the country’s massive infrastructure program is on track. The NEDA recently approved several big-ticket infrastructure projects, among them the Subic-Clark railway project, the Clark International Airport expansion project and San Miguel Corporation’s proposal to build an international airport – dubbed as an “aerotropolis” – in Bulacan. All these projects are seen to generate jobs as well as spur economic growth outside Metro Manila.

In another meeting we organized for Secretary Diokno with the members of the US Chamber of Commerce (USCC), the Budget Secretary highlighted the sustainability of growth and the underlying strength of the country’s macroeconomic fundamentals. “We want to achieve growth of 7 percent to eight percent, pushing the Philippine economy to upper-middle income status by 2022,” he said.

As we have told many of our businessmen friends and even our embassy staff who have been away from the country, this is the best time to invest in the Philippines considering the phenomenal growth it has been displaying, with the return on investments looking very promising.

USCC senior vice president for Asia Charles Freeman noted that the Philippines has “a very good story to tell” and that its economy is opening up for greater foreign investment. “In our annual ASEAN Business Outlook Survey, 85 percent of US companies we surveyed in the Philippines expect profits to increase in 2018,” he added. The survey also showed that 70 percent expect to expand their operations in the Philippines over the next few years.

We are engaged in a lot of activities and in discussion with US Trade Representative Robert Lighthizer on trade issues and a free trade agreement (FTA) between the two nations. USCC senior director for Southeast Asia John Goyer has expressed support for exploratory dialogue on the FTA, saying the Philippines is a logical partner for moves to open foreign markets to US exports of goods and services.

The other day, I had a breakfast forum meeting with Meridian International headed by its president, Ambassador Stuart Holliday, with 20 American businessmen. They asked about the business climate in the Philippines and the areas where they could invest. There is now a very high level of interest in the Philippines, with so many indicators pointing to the direction that we are really becoming an Asian economic tiger.

With this kind of interest going on in D.C and everywhere, we will finally see the dawn of a new era of prosperity in our country.

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