The Philippine economic team, led by Finance Secretary Benjamin Diokno, conducted its first Philippine Business Opportunities Forum (PBOF) on February 10, 2023 at the Palace Hotel Tokyo, Japan to showcase new investment opportunities––particularly in high-impact sectors such as manufacturing, infrastructure, services, energy, and agriculture.

Secretary Diokno presented the Philippines’ latest accomplishments and policies before an audience of about a thousand top Japanese officials, business leaders, foreign direct investors, and portfolio investors, who are looking to expand operations or do business in the Philippines.

Japan remains to be the Philippines’ major trade partner and top investment source. It was the country’s second largest trading partner and the second largest source of investments.

Key areas of cooperation

Secretary Diokno identified some key sectors as areas of cooperation such as renewable energy (RE), with targets to increase the share of RE in the power generation mix to 35 percent by 2030 and 50 percent by 2040.

To this end, the country has opened up its RE sector to full foreign ownership, particularly in the exploration, development, and utilization of solar, wind, hydro, and ocean or tidal energy.

Secretary Diokno also highlighted that the Philippines is determined to re-establish itself as a top exporter of agricultural products. Hence, the country has increased its agriculture budget by more than 40 percent and is investing heavily in medium and long-term efforts to increase local food production and modernize the agriculture sector.

The Philippines’ manufacturing output also grew for 7 straight months and soared to a 7-month high in December 2022. This makes the country a capable source of intermediate products and services for businesses.

The government will harness the public-private partnership (PPP) mechanism to augment the Marcos administration’s Build Better More infrastructure program. This move will help speed up investments while ensuring quality infrastructure development.

Secretary Diokno also zeroed in on the Philippines’ pool of young, tech-savvy, and English-proficient workers that will complement Japan’s forward-looking enterprises, advanced technology, and research and development (R&D) programs.

“With a median age of 25 years old, the Philippines enjoys what is called a demographic sweet spot. We intend to capitalize on our positive demographic fundamentals to boost recovery and build a more inclusive and modern economy,” he said.

Policies and plans that support the Philippines’ economic resurgence

With the goal to maintain infrastructure spending at 5 to 6 percent of gross domestic product (GDP) annually, the government is implementing the Philippines’ first-ever Medium-Term Fiscal Framework (MTFF), which aims to bring down the debt-to-GDP ratio to less than 60 percent by 2025 then further down to 51.1 percent in 2028, and reduce the budget deficit to 3.0 percent of GDP by 2028.

“We have already made significant headway on this front. With our faster-than-expected growth in the last quarter of 2022, our debt-to-GDP ratio by the end of the year improved to 60.9 percent, lower than the government’s target of 61.8 percent for 2022,” said Secretary Diokno.

Apart from prudent fiscal management, the Philippine Development Plan 2023-2028 was adopted to execute actionable strategies for economic and social transformation.

Furthermore, structural reforms such as amendments to the Retail Trade Liberalization Act (RTLA), Foreign Investments Act (FIA), Public Service Act (PSA), and Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act have been passed to facilitate the flow of foreign capital in key sectors, enhance the ease of doing business, and foster the growth of modern and transformative industries.

This investment-led growth strategy will lead to more employment opportunities and more high quality and green jobs for Filipinos––as seen in the results of the recent Labor Force Survey (LFS) that recorded the Philippines’ second lowest unemployment rate of 4.3 percent since April 2005, which is also lower than the pre-pandemic rate of 4.5 percent.

The Philippine Business Opportunities Forum

Secretary Diokno, Bangko Sentral ng Pilipinas Governor Felipe Medalla, National Economic and Development Authority Secretary Arsenio Balisacan, Budget Secretary Amenah Pangandaman, Department of Energy (DOE) Undersecretary Felix William Fuentebella, and Nomura Chief Economist for Southeast Asia Euben Paracuelles participated in a panel discussion on the Philippine economic performance and outlook.

During the discussion, Secretary Diokno noted that in the last six years, the country’s capital formation grew by double-digits, which is attributable to the assistance given by Japan and the Asian Development Bank (ADB). He said, “I estimate that between the two of them, they would account for about 80 percent of our infrastructure.”

As for Governor Medalla, he expressed his confidence in addressing inflation due to the country’s strict monetary policy that does not allow excess demand. He also mentioned the resiliency of Philippine banks, which enabled the country to respond quickly when the economy contracted.

On his part, Secretary Balisacan encouraged the Japanese government and business community to take advantage of the around 3,700 projects that have been recently identified as public infrastructure programs for the next six years.

On the budget side, Secretary Amenah shared that the National Government (NG)’s disbursement will be 20 to 21 percent from 2023 until 2028. Priorities include infrastructure, human capital development, and health.

On energy, Undersecretary Fuentebella mentioned the implementation of the Energy Efficiency and Conservation Law, which is a whole-of-nation approach to secure sufficient and stable energy supply.

Chief Economist Paracuelles, on the other hand, shared the Philippines’ economic outlook from the private sector’s perspective. He identified the Philippines, Indonesia, and India as countries that have implemented very strong structural reforms and infrastructure programs. According to him, these make for attractive foreign direct investment (FDI) destinations.

Meanwhile, Trade and Industry Secretary Alfredo Pascual, Public Works and Highways Secretary Manuel Bonoan, Tourism Secretary Maria Esperanza Christina Garcia Frasco, and Transportation Secretary Jaime Bautista were engaged in a panel discussion on infrastructure and industry.

President Ferdinand R. Marcos, Jr. ended the program by acknowledging Japan for their role in the Philippines’ socioeconomic transformation over the past decades.

The PBOF was organized by the Department of Trade and Industry (DTI), Japan-External Trade Organization, the Japan-Philippines Economic Cooperation Committee, Embassy of the Republic of the Philippines in Japan, ASEAN-Japan Centre, the Philippine Society of Japan, Inc., Bangko Sentral ng Pilipinas (BSP), and the Department of Finance (DOF) with the support of the Ministry of Economy, Trade and Industry, the Japan Chamber of Commerce and Industry, Daiwa Securities Group, Inc., Mitsubishi UFJ Financial Group, Inc., Mizuho Financial Group, Inc., Nomura Holdings, Inc., and Sumitomo Mitsui Financial Group. Inc.