THE Oxford Business Group (OBG)’s latest study showed the reform initiatives and the government’s massive infrastructure program face challenges from business leaders, but added key sectors continue to provide strong gains.
Commenting on OBG’s The Philippines 2018 report, Patrick Cooke, OBG’s regional editor for Asia said that efforts among manufacturers to move up the value chain, together with continued strong performances across the service and trade industries, had also provided firm foundations for future expansion, helping the country to secure a sixth consecutive year of GDP growth above six percent.
“While our report highlights the issues that remain a challenge for business leaders, such as uncertainty over tax reforms and the need to improve supply chains, core segments of the manufacturing industry continue to deliver strong performances, despite intense regional competition and unhelpful trade disputes between the world’s leading economic powers,” he said. “With growth in the first quarter of 2018 having reached 6.8%, on a par with China and behind only Vietnam in the region, the Philippines has much to feel positive about.”
At the same time, the study underscored the Duterte administration’s “Build, Build, Build” infrastructure program as the main driver to the country’s growth and inclusive economic agenda.
It also took a closer look to BBB’s funding mechanisms for the broad range of projects either in the pipeline or under consideration, including airports, seaports, railways and the country’s first subway system, as well as exploring the long-term implications of these projects for inclusive growth and economic productivity.
“The administration’s goals of making infrastructure development a top priority and ensuring that future economic growth is both sustainable and more inclusive are already generating a raft of new opportunities nationwide, as our coverage of the country’s emerging cities shows,” said OBG’s editor in chief, Oliver Cornock. “With a diverse range of funding options to finance the project pipeline now being pursued, the Philippines should be able to look forward to a period of heightened economic activity in the medium term.”
The report said the massive infrastructure spending is pushing the growth in country’s construction sector, which is benefiting from rising levels of urbanization and growing demand for both office space and housing in Metro Manila and other provinces.
Cornock added that sharpening the focus on the Philippines’ regional areas had set the scene for a new period of investment and enterprise.
In addition, the 279-page report cited the merits of the Tax Reform for Acceleration and Inclusion law, considering its role in boosting revenue for national projects, its impact on inflation and the mixed reception it has received so far from business leaders.
According to the report, the expansion across key components of the Philippines’ manufacturing industry, including electronics, food and beverages, chemicals and furniture, helped boosted overall output by 8.5 percent in 2017. Looking ahead, OBG also examined the suitability of the government-led Inclusive Innovation Industrial Strategy in raising the competitiveness of the manufacturing sector in an era of rapid technological change.