OSAKA—Finance Secretary Carlos Dominguez III has expressed confidence that as the Philippines’ economic emergence gains traction, its bilateral relations with Japan will “grow more comprehensively” over the years especially as both countries complement each other and can even become “demographic partners.”

Dominguez told the Japanese business community that Japan’s forward-looking enterprises and more experienced and highly skilled labor force with a median age of up to 46 years old and the Philippines’ young, technology savvy workers whose average age is 24 years old complement each other.

Confirming the potentials of this demographic complementarity, he said, are the 78 Osaka-based companies operating in the Philippines as of 2017 and that are run by Japanese expatriates who employ thousands of talented, English-proficient Filipino employees.

“Over the years, we have enjoyed excellent trade relations and business collaboration with the hardy enterprises of this prefecture. I am sure that in the coming period, we will discover even more complementarities,” Dominguez said at the Philippine Economic Briefing (PEB) held here at the Imperial Hotel Osaka.

This latest PEB, which showcases the Philippines’ vast potentials as a premier investment destination, is the third to be held in Japan. Previous PEB events were both held in Tokyo in September 2017 and in June last year.

Dominguez invited investors based in this port city and the rest of the Kansai region to take a closer look at how the Philippines and its economy have improved, and to explore the myriad of investment opportunities that have opened up as a result of the bold reforms being undertaken by the Duterte administration—“from the booming construction sector to the blossoming tourism industry.”

“The Philippines is currently one of the fastest-growing economies in Asia. Our resilience has been tested and proven strong. Our young population is eager to work with forward-looking enterprises. Our people are most welcoming to our closest friends in the region,” Dominguez said. “I invite you to be part of this remarkable economic unfolding.”

During the forum, Dominguez underscored anew Japan’s key role in jumpstarting the Duterte administration’s “Build, Build, Build” infrastructure program as he pointed out that the single biggest project in this ambitious initiative is the Philippines’ first-ever underground rail system, the Metro Manila Subway, which is being funded in large part by the Japan International Cooperation Agency (JICA).

The Metro Manila Subway project is the recipient of the largest Official Development Assistance (ODA) that the Philippines has ever received from Japan. A JPY 104.53 billion loan agreement between the two countries for this project was signed in March last year.

Dominguez had also acknowledged the Japanese government’s generous support for “Build, Build, Build” during the recent visit of Japan Foreign Minister Tarō Kōno to Davao City.

The “fast and sure” approach adopted by Japan and the Philippines, Dominguez said, has shortened loan processing approvals for “Build, Build, Build” projects to just an average of 3 to 4 months, demonstrating their shared commitment “to work closely to ensure that the Filipino people get to benefit from these projects at reasonable costs and at the soonest possible time.”

Dominguez also noted that last year, Japan was the Philippines’ second major trading partner with bilateral trade reaching US$20 billion.

For the first eleven months of 2018, Japan was the Philippines’ 4th largest source of foreign direct investments (FDIs), with investment inflows reaching US$190 million or a hefty 1,200 percent increase over the same period in 2017.

Dominguez said Japan has also been a major source of the Philippines’ diversified financing strategy, with the Philippines’ successful return to the Samurai market marked with a multi-tranche JPY154.2-billion transaction.

He noted that the Philippine economy has been growing at an average of 6.5 percent in the first 10 quarters of the Duterte administration, and is expected to perform better in 2019 and the years ahead owing to several factors, among them:

· The shift from consumption- to investments-led growth as shown by FDIs reaching an unprecedented US$10 billion in 2017 and US$9.1 billion in the first 11 months of 2018;

· Extensive public investments in infrastructure modernization and human capital development complemented by prudent fiscal management;

· A comprehensive tax reform program, of which the first package alone has helped fund the infrastructure program and yielded immense benefits for Filipinos in the form of increased spending power, as indicated by the robust growth in sales and high profit margins of publicly listed retail giants and real estate companies in 2018. The second package on reforms in corporate taxation and rationalization of fiscal incentives, is aimed at further improving the Philippines’ status as an investment magnet;

· Expenditures posting its fastest rate of expansion since the beginning of the Duterte administration. With its continued growth, spending in 2018 was 21 percent higher than the 2017 level. The expenditure effort in 2018 reached 19.6 percent, the highest ever achieved in the past 28 years;

· A low debt-to-GDP ratio of 41.9 percent in 2018, down from 68.5 percent in 2005. This is expected to decrease further to 38.6 percent in 2022; and

· The passage of legislation improving the ease of doing business, and the partial removal of foreign investment restrictions under the Foreign Investments Negative List.

“In a word, the Philippines aspires to become the most hospitable economy for business. We encourage both market transparency and respect for the sanctity of contracts. We aim, through prudent economic and monetary management, to provide improved certainty for enterprises,” Dominguez said.

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