Economy
From The Report: Philippines 2018
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With GDP growth averaging 6.4% between 2010 and 2017, the Philippines is home to one of the top-performing economies in South-east Asia. Buoyed by its robust services sector, the economy has remained strong due to rising investment in manufacturing projects, strong remittance inflows from overseas workers and an infrastructure-spending surge under the government’s Build, Build, Build development programme. Foreign direct investment (FDI) reached an all-time high in 2017 as investors flocked to capitalise on rising domestic demand and optimistic growth projections. FDI is expected to increase once again in 2018, supported by both a young and skilled workforce, and rising government spending, with the long-awaited Tax Reform for Acceleration and Inclusion initiative expected to augment public coffers. This chapter contains interviews with Carlos G Dominguez III, Secretary of Finance; and Jaime Augusto Zobel de Ayala, Chairman and CEO, Ayala Corporation.

Articles from this Chapter

Overview

Solid fundamentals: The government takes measures to ensure that rapid economic growth is both inclusive and sustainable
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 With GDP growth averaging 6.4% between 2010 and 2017, the Philippines is one of the top-performing economies in South-east Asia. Underpinned by its robust services sector, it is seeing rising investment in manufacturing, strong remittance inflows from overseas workers and an infrastructure spending surge under the Build, Build, Build (BBB) development programme. Foreign direct investment (FDI) reached an all-time high in 2017 as investors flocked to capitalise on rising domestic demand and…

Interview

Diversified funding: Carlos G Dominguez III, Secretary of Finance, on the comprehensive tax reform programme (CTRP)
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Interview:Carlos G Dominguez III To what extent will the CTRP impact state revenue and the wider fiscal landscape? CARLOS DOMINGUEZ: The revenue gains from the Tax Reform for Acceleration and Inclusion (TRAIN), and Official Development Assistance (ODA) deals have been complemented by the successful float of 10-year US dollar-denominated bonds worth $2bn, followed by our inaugural issue of RMB1.46bn ($219m) worth of threeyear Panda bonds in March 2018. These measures will ensure a steady revenue…

Analysis

On track for reform: Tax overhaul set to generate substantial revenue to support Build, Build, Build agenda
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 In late 2017 the Philippines reached a major reform milestone when President Rodrigo Duterte officially approved the first of five Tax Reform for Acceleration and Inclusion (TRAIN) packages. These initiatives are set to lower personal income taxes, expand the value-added tax (VAT) base, and increase taxes on petroleum products, automobiles and sweetened beverages. They are also expected to help raise the revenue necessary to deliver Build, Build, Build (BBB) – the government’s multibillion-dollar…

Interview

A diversified approach: Jaime Augusto Zobel de Ayala, Chairman and CEO, Ayala Corporation, on sustainable business practices and the role of technology in driving development
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Interview:Jaime Augusto Zobel de Ayala What is hindering sustainability among businesses? JAIME AUGUSTO ZOBEL DE AYALA: The first challenge is operational: companies have to contend with affordability and access issues in low-income markets. Lower disposable income limits both the amount and the variety of products that can be purchased. The second challenge is cultural: few corporate decision-makers come from the lower-income segment of the corporate ladder, so they are removed from the…

Analysis

Global markets: A surge of new borrowing accompanies the successful issuance of several foreign currency-denominated bonds
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 The government is moving full steam ahead with its infrastructure development programme, Build, Build, Build, entailing $158bn of infrastructure investment over 2018-22. However, the authorities have gradually shifted away from using public-private partnerships, with a growing emphasis on overseas development assistance and public spending to expedite big-ticket projects (see overview). As such, public stakeholders anticipate a surge of new borrowing in 2018, especially from global debt…

Analysis

Lifting all boats: The government works to address persistent inequality
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 Over a decade of robust macroeconomic expansion has driven the Philippines to the forefront of regional economies, with personal consumption driving GDP growth and a swelling middle class expected to attract foreign investment in the coming years. However, despite a strong emphasis on poverty reduction and income equality in policies, poverty and income inequality remain persistent even as GDP growth approaches 7%. Income inequality has become a particularly pressing issue, given the government’s…