Shifting to investments as engine of growth

It is always good to start the new year with a clear idea of our destination and the means to get there.

The year that just ended was dominated by concerns on security: security in the traditional sense, in terms of defending our territory from the expansionist activities of a giant neighbor, and, at the same time, economic security. Filipinos suffered high prices of goods and were uncertain about their prospects in the days to come. These price fluctuations are determined not only by conventional market factors but also by geopolitical developments. Indeed, economic security—where citizens consistently meet their needs—is national security.

We expect to see more of the same geopolitical challenges this year, particularly in the Indo-Pacific region. The Philippines is at the heart of this region and, given our reliance on and interconnectedness with other nations and economies, we will certainly be affected by whatever developments that might take place.

Fortunately, while there are risks, there are also opportunities.

The Philippines is poised to take advantage of this movement, at a time when the limits and drawbacks of its being a consumption-driven economy have been highlighted and the merits of investment-led growth have been extolled. Investments generate a multiplier effect in the economy in terms of jobs, income, and infrastructure, and are a more stable path toward sustained economic prosperity for all.

This pivot to investments is now a clearer, greater possibility with the creation of an agency dedicated to facilitating strategic investments and navigating government regulations. The Office of the Special Assistant to the President for Investment and Economic Affairs (Osapiea), created via Executive Order No. 49, will no doubt play a central, crucial role in transitioning to investment-led growth and in expediting the realization of investment pledges, thereby generating quality jobs and promoting economic growth.

The first secretary of the Osapiea will be Frederick Go, who has already been serving as presidential adviser for investment and economic affairs since January 2023. Go’s solid background as president and CEO of Robinsons Land gives him a unique and valuable perspective into the needs and potential of the private sector as it works more closely with the government.

In September 2023, Pulse Asia found that 70 percent of Filipinos believe that the private sector plays a crucial role in economic security. Moreover, 64 percent of respondents said that the private sector can help by manufacturing more affordable and accessible goods for Filipino consumers, 60 percent said by generating employment opportunities, and 58 percent said by expanding livelihood prospects.

It is indeed in the manufacturing sector where the need is acute and the room for growth spacious. Due to a host of reasons, foreign companies are moving away from China and exploring relocation to neighboring countries, particularly in Southeast Asia.

Another Stratbase-commissioned Pulse Asia survey, this time conducted in March 2023, found that almost 90 percent of Filipinos would like the government to support the local manufacturing sector.

Then again, there are a lot of conditions that should be in place before this ideal situation can happen. Foremost is the improvement of the regulatory environment. For businesses to come to the Philippines and stay, they have to see that the government is intent on removing or at least minimizing the roadblocks, and on making doing business easy. The rules have to be predictable and evenly applied, and the costs of doing business have to be already stated, with no “surprises” at the end.

A major feature that will attract investments, not only in manufacturing but in general, would be clear, tangible proof of the administration’s efforts toward transparency and accountability. Using technology to improve the efficiency of government transactions and minimize instances of human intervention is one way to do this. This is possible not only through the initiatives of government but also through a multisectoral collaboration among the public and private sectors and civil society.

By creating a business-friendly environment, shifting to more investment-led growth, and demonstrating a commitment to supporting private enterprises, the Philippines can position itself as a preferred destination for companies seeking to diversify their operations and mitigate risks associated with geopolitical uncertainties. In the process, Filipinos will have more employment options, and higher and more stable income, all translating to a prosperous nation with a better quality of life.

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Dindo Manhit is founder and CEO of the Stratbase Group.