As the figures start to come in, it’s safe to say that news of the Philippines’ economic demise – a regular prediction over past months by media, analysts and “experts” – is premature. In fact, if investments are anything to go by, not only is it doing well, but its outlook appears to be bright.
Approved investment pledges for this year could reach between PHP403.5 billion PHP421.7 billion, marking a 10-15% increase on last year. And while that should confound those earlier concerns that policies being pursued by Philippine President Rodrigo Duterte would have the opposite effect – seeing nervous investors retrenching and cash inflows drying up – what it shows instead is that confidence in the Philippine economy is high and that both foreign and domestic investors are comfortable with the way the administration is handling things.
What makes this all the more impressive is that the investment community, abroad and in the Philippines, has had to weigh strategies against months of negative news on the Philippines, much of it centred around coverage of Duterte’s war on drugs – the blood, the killings in the streets, the executions, prisoners packed like sardines in crumbling jails, tales of fear and on and on.
On top of that, the coverage of Duterte’s war on terror also had to be assessed – the stepped-up military campaign in southwest Mindanao, kidnappings, the bombing of a night market in Davao City, the row over removing US military personnel from the theatre of combat, and more.
And then there was Duterte’s foreign policy and the adverse publicity which that got – specifically, over his distancing the Philippines from its traditional partner, the US, and moving closer to China. Didn’t we read somewhere that this move was “economic suicide”? Individual reports are not important; the fact is that the vast majority of media coverage which this policy shift attracted was decidedly cynical and gloomy. And of course, it had little to do with economics and everything to do with politics.
Certainly, though, investors will have taken all that on board. But they must also have seen the other side. Duterte’s staggering 92% popularity rating among his people; they must have approved of his socio-economic agenda and its pledge to lift employment and lower poverty; the falling crime figures; the new drug-rehab infrastructure. They must have looked at the success of his visits, not just to China, but to Japan and to the countries of fellow Asean members. They must have seen a positive side which the media, analysts and “experts” either couldn’t see or refused to.
Net FDI inflows for the first eight months of this year hit PHP265.5 billion, a massive increase of PHP110.4 over the same period last year. A statement put out by Bangko Sentral ng Pilipinas, the central bank, said: “The sustained FDI inflows were buoyed by investors’ confidence in the economy on the back of the country’s sound macroeconomic fundamentals”. It’s the normal anodyne statement which central banks routinely put out by way of explanation, but there’s no masking that these figures are very reassuring.
Moving from the general to the particular, the country’s seven investment promotion agencies (or, IPAs) received combined approved investments – from both foreign and Filipino-nationals – in the January to September period, of PHP177.7 billion. According to the Philippine Statistics Authority, that’s a 97.5% increase. But what it also means is more new jobs, and plenty of them.
At one IPA, the Board of Investments (BOI), an attached agency of the Department of Trade and Industry (DTI), there are presently 44 projects – worth PHP52 billion – seeking approval. Of these 57% are in the energy sector. The rest comprise: manufacturing, 17%; agriculture, and real estate, 12% each; logistics/water transport, 2%.
These “positive development,” according to BOI chairman, DTI Secretary Ramon Lopez, clearly show support for the government’s socio-economic agenda and its key purpose to spread the benefits of an improving economy across society. “More investments mean more jobs, ensuring economic development from the bottom of the pyramid,” he said.
BOI managing head, Ceferino Rodolfo explained that the investments in resource-based sectors could elevate the country’s competitiveness. “What we are seeing in the real sector that relies on fundamentals of the economy, the fundamental strengths of the economy, is that growth is being sustained or even accelerated,” he said.
Another IPA, the Subic Bay Metropolitan Authority (SBMA), has approved PHP111.5 billion in new investments in the first nine months of this year. That alone is expected to create more than 55,000 new jobs.
In all this, then, hopefully the negative coverage will be blunted. There will always be those who are constitutionally incapable of accepting good news; there will always be the naysayers and the stubborn who reject the positive when it conflicts with their own narrative. But for the rest – for the country at large – slowly but surely, we’re seeing the goals of Duterte’s socio-economic agenda start to materialise; coming into view like a butterfly emerging from the chrysalis. And that is likely the view investors are taking also.