Secretary of Finance
October 31, 2024
Fellow workers in the government; friends and partners in the United Kingdom; and to everyone who came here and has shown great interest in the Philippines: good morning.
Thank you very much for investing your time to know more about what the Philippines can offer.
If there is one country that can stand witness to the best that the Philippines can give the world, it is most probably the United Kingdom.
The presence of around 250,000 Filipinos here in the UK today is a testament to this, with more or less a fifth of them providing critical services to the British healthcare system.
And let us not forget, it was a Filipina nurse in the UK who administered the world’s first COVID-19 vaccine.
This is a powerful symbol of what happens whenever and wherever you open an opportunity for Filipinos, we will always deliver.
And this confidence extends to our growing economic partnership as well.
For the first time in five years, the UK is our number one source of foreign direct investment inflows.
British investors brought 585.74 million British pounds of investments to the Philippines as of the end of July. This is 4,230 percent higher than the previous year.
Moreover, the UK ranks as our eighth-largest source of tourist arrivals.
And 97 British companies currently operate in our economic zones. Incidentally, my hometown Batangas hosts the biggest British manufacturing registered business enterprise in the country.
Clearly, our mutually beneficial partnership has played an indispensable role in the Philippines’ growth story.
And just like every trusted friend, let me give you some advice.
If you are looking for a place to grow your business and make more money, I’d say: Choose the Philippines. Make it happen in the Philippines.
Because there is no other country in the world, at this moment, that holds so much potential to boost your investments.
Let me tell you why. The Philippines is booming and has all the makings of a tiger economy.
Despite fierce global headwinds and geopolitical tensions, we are among the best performing economies in ASEAN, with GDP growth averaging 6.1 percent since President Ferdinand R. Marcos, Jr. took office.
Major international organizations and multilateral institutions attest to our economic strength.
Our credit ratings, too, have either been upgraded or reaffirmed by leading global credit agencies.
All these are a strong vote of confidence in our sound policies, growth potential, and the decisive leadership of President Marcos, Jr.
And the Philippines offers clear, undeniable opportunities for British enterprises to grow and prosper in our expanding domestic market.
Our labor force is strong and vibrant, with unemployment steadily decreasing.
Currently, 49.2 million Filipinos are employed and 62.4 percent of them hold formal, stable jobs. This is proof of an expanding middle class ready to drive consumer demand.
The competitive advantage offered by our demographic sweet spot—a young median-age population of only 25 years old—strategically makes us an ideal demographic partner for the UK whose median age is 40.
With our strong focus on education, high English proficiency, and a deeply ingrained work ethic, Filipinos are among the world’s most highly sought-after employees. And again, you are a direct witness and beneficiary to this.
We are committed to continuously upskilling our workforce through our Artificial Intelligence Strategy Roadmap to fully harness their talents and ensure that they can power up your forward-looking industries.
Additionally, our inflation rate has steadily decreased, reaching its lowest level in four years.
Our whole-of-government efforts, such as the reduction of rice tariffs, is expected to keep inflation within our target band for the next two years. This certainly creates a more favorable investment climate.
Low and stable prices will speed up the growth of our already robust domestic demand with household consumption accounting for more than 70 percent of our economy.
With our favorable domestic inflation outlook, our Central Bank was the first in ASEAN to start its monetary policy easing.
To date, we’ve cut our interest rates to a total of 50 basis points, creating an even more conducive environment for growth. And more rate cuts are expected in the coming months.
Price stabilization has also allowed our Central Bank to slash 250 basis points on the reserve requirements across all financial intermediaries, injecting more liquidity into the financial system to boost investment in our capital markets.
With these favorable factors, the Philippines is expected to ascend to upper-middle-income status next year. And by 2030, we are projected to become the world’s 13th-largest consumer market.
Fast forward to 2075, the Philippines is projected to become the world’s 14th largest economy, outpacing France and just four notches below the UK.
Coupled with this strong potential, our commitment to prudent economic and fiscal management ensures stability for British enterprises.
We have a clear and proactive strategy for fiscal consolidation that takes into account ongoing external developments.
And the good news is that we are on track with our targets to reduce our deficit and debt gradually in a realistic manner; while creating more jobs, increasing incomes, and decreasing poverty in the process.
The Euro market has been a vital source of financing for the Philippines, with our bond offerings consistently attracting exceptional demand.
This strong appetite has enabled us to tighten pricing and trade above our credit rating.
In fact, in 2020, we made history by issuing our first-ever zero-coupon Euro bond.
It certainly makes strategic sense for us to increase our financial integration, especially as we enter into JP Morgan’s Bond Index soon.
We also recognize that investor confidence is further strengthened by improving our institutional governance.
This is why we put great emphasis on the transparency of our borrowings.
This principle has earned us the top spot in a recent global ranking on debt transparency, achieving a nearly perfect score.
Meanwhile, British investors can surely find assurance in the Philippines’ resilience to trade wars, supported by our hefty overseas remittances, increasing tourism receipts, and growing BPO revenues.
These, along with our low external debt and an all-time high gross international reserves, should keep our currency stable and resilient.
The Philippine banking system’s strength and stability are also indisputable, with capital adequacy and liquidity coverage ratios well above global standards.
Adding to all of these is our stable political environment, having a President with a strong political capital and a friendly foreign policy.
The President himself has been our primary marketer, engaging the rest of the world to form alliances.
Under his leadership, our investment landscape has never been more liberalized and welcoming to partners from around the globe.
With our new Public-Private Partnership Code, we have streamlined the process and made your involvement faster and easier in our Build Better More program.
These are 186 flagship infrastructure projects ranging from physical and digital connectivity to renewable energy and transport systems that need British expertise.
We invite you to submit unsolicited proposals, respond to solicited ones, or explore more joint ventures with us for these projects.
After the success of our PPP for the Ninoy Aquino International Airport, our country’s main gateway, we are set to privatize at least four more airports next year—each presenting excellent opportunities for British investors.
And with our comprehensive digital connectivity projects, the Philippines is ready to become the hotspot for technology-driven businesses in the UK such as hyper-scale data centers.
To further enhance your investment experience, we have green lanes for strategic investments that ensure seamless and efficient business processes.
Additionally, foreign investors are now allowed full ownership of renewable energy projects and high-impact public services such as telecommunications, toll roads, airports, and shipping.
We are also aware that the UK has expressed strong interest in taking part in the Luzon Economic Corridor—the future logistics and manufacturing super hub of the Philippines and eventually of Asia.
This will be a perfect nexus for British investors involved in manufacturing, semiconductor supply chains, renewable energy, and sustainable agribusiness.
To facilitate your swift entry and positioning in this strategic corridor, we will enact anytime soon the new amendments to our fiscal incentives regime, known as CREATE MORE.
This policy is specifically designed to address your concerns and tailor fiscal and non-fiscal incentives to meet your specific needs.
For example, we have further streamlined business compliance by reducing documentary requirements.
We have also resolved VAT concerns by exempting export-oriented enterprises from paying value-added tax.
For projects with investment capital exceeding 199.67 million British pounds, CREATE MORE offers a very competitive incentive package.
Under the enhanced deductions regime, registered business enterprises benefit from a reduced corporate income tax rate of 20 percent.
Additionally, the maximum duration of tax incentives availment will be extended by 10 more years, from 17 years to 27 years. For labor-intensive projects, this can even be extended for another decade.
Registered business enterprises will likewise benefit from the 200 percent deduction on power expenses—significantly cutting costs for the manufacturing sector.
This incentive bodes well for the sector’s ongoing robust improvement, as demonstrated by the Philippines’ recent Purchasing Managers’ Index in manufacturing of 53.7—the highest among five ASEAN countries and our strongest performance in two years.
The tourism sector also stands to gain, with an additional 50 percent reduction for reinvestment allowances on priority tourism projects or activities.
Another significant reform to watch for is our proposal to reduce the tax on stock transactions from 0.6 percent to just 0.1 percent. This will lower friction costs and align us with our regional peers.
The proposal works in tandem with other reforms that will harmonize and simplify our tax structure on passive income, financial products, and its transactions.
And I could go on and on—the list of transformative reforms in motion is very extensive to make us stand out as the most hospitable economy for British enterprises.
And we are committed to working non-stop until good becomes better and better becomes the best for business.
I am confident that today’s discussions will leave you with no doubt about the predictability, stability, and sustainability of doing business in the Philippines.
We also brought here with us Filipino business leaders to show you how the Philippines is a place where your money grows and your businesses prosper.
And rest assured, if you have more concerns, I will also personally do the hand-holding to make it easier and more profitable for you to invest in the Philippines.
As I have mentioned earlier, it has been long proven: just give Filipinos the opportunity and watch them deliver their best.
So I am urging you to bet on us. Make the wise decision to invest in the Philippines. And we will deliver.
With that, I hope to see all of you in the Philippines very soon. Mabuhay ang Bagong Pilipinas!
