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The International Monetary Fund (IMF) had very laudatory words for the Philippine economy last Monday. Shanaka Jayanath Peiris, IMF resident representative, lauded our stronger-than-expected expansion in the third quarter of this year and so the IMF is set to upgrade its economic growth projection for the country, he said.
With its 7.1 percent Gross Domestic Production (GDP) growth in the third quarter (July, August, September), the Philippines was the fastest growing economy in the region. Its GDP growth was faster than China’s 6.7 percent, Vietnam’s 6.4 percent, Indonesia’s 5 percent, and Malaysia’s 4.3 percent. The growth was led by a recovery in the agriculture sector and continued strength of the private consumption and gross investment.
“We will most likely be revising our growth forecast for 2016 in the next round of world economic outlook revisions,” Peiris said.
On the same day, however, the Management Association of the Philippines (MAP) deplored that the Philippines continues to trail other members of the Association of Southeast Asian Nations (ASEAN) in Foreign Direct Investments (FDI). As of October, 2015, the Philippines had $5.724 billion in total FDI, behind Singapore with $61.284 billion; Indonesia, $16.916 billion; Vietnam, $11.8 billion; and Malaysia, $11.289 billion.
“We are so good at enticing foreign investors. We are so good at inviting them into our country,” MAP President Perry Pe said. “But the moment the foreign investors come here, we’re so good at frustrating them…. We put up so many restrictions along the way, so much red tape, that ease of doing business becomes zero.” The country offers many opportunities for foreign investments, he said, but existing restrictions and persistent corruption keeps many investors from coming.
We welcome the IMF assessment of Philippine economic progress but we should also be duly warned by the MAP criticism of the many government restrictions that discourage business enterprises, local or foreign – “whether it be from a Bureau of Internal Revenue perspective, from a Customs perspective, and even from a Securities and Exchange Commission perspective” – in the words of the MAP president.
The new Duterte administration is leading a move for Constitutional change to remove or amend certain provisions that now make the Philippines less attractive to foreign investors than our ASEAN neighbors. But there are many other provisions of law and restrictive practices in many government offices that can be eased or eliminated, even without Charter change, to help push national development forward at a faster pace.