To say that times are more challenging for Filipinos now is to state the obvious. A Pulse Asia survey conducted in the third quarter of this year found that Filipinos’ most urgent concerns are predominantly economic. Nearly three out of four Filipinos said their top concern was controlling inflation, 49% believe that the pay of workers must be increased, and 27% say that more jobs should be created.
There is a basis for this concern. According to the Philippine Statistics Authority, overall inflation increased to 6.1% in September from 5.3% in August. Small wonder that consumer confidence remained in negative territory, albeit with a slight improvement, at -9.6% for the third quarter of the year from -10.5% in the second quarter, according to the Consumer Expectation Survey of the Bangko Sentral ng Pilipinas (BSP).
Business outlook on the economy, however, continued to weaken. According to the BSP’s Business Expectations Survey, the confidence index in the third quarter went down to 35.8% from 40.8% in the previous quarter. Among the factors that contributed to the damped down business outlook were a decline in sales and demand for goods and services due to weather-related disruptions and other seasonal factors, higher prices of raw materials and production costs, elevated inflation and interest rates, and peso depreciation.
Indeed, controlling inflation is crucial to the creation of a stable economic environment that is conducive to economic growth, an increase in wages, and boosting the confidence of businesses to expand and invest in the Philippines.
President Ferdinand Marcos, Jr. said that economic security — where individuals enjoy a stable source of income and are consistently able to meet their basic needs — is national security. Achieving economic security, in turn, hinges on the interplay and collaboration among various stakeholders, specifically the government and the private sector. While it articulates the vision and sets the direction of the nation, the government by itself alone cannot do everything. The private sector is an ideal partner because of its access to capital, technical expertise, and operational efficiency.
Another Pulse Asia survey commissioned by the Stratbase ADR Institute revealed that in the third quarter of 2023, seven out of 10 Filipinos agreed that the private sector plays an instrumental role in ensuring economic security. The private sector does this by making goods that are more affordable and accessible to Filipino consumers (64%), creating jobs (60%), and expanding livelihood opportunities (58%).
With a majority of Filipinos aware of the contribution of the private sector to the economy and, as a consequence, people’s income and security, the government is on the right path in declaring that creating an investment- and business-friendly economic and regulatory environment is a priority. While the current consumer-driven economy has been in place for years, such an economic structure exposes the country to numerous external factors that are beyond our control and could easily affect and even cripple growth. We saw this firsthand during the 2020 lockdowns, when mobility restrictions disrupted supply chains and dampened various services, causing the economy to contract.
An investment-driven economy, on the other hand, will have a multiplier effect: it will pave the way for better infrastructure, create jobs, increase income, and improve quality of life. It will also create a virtuous cycle that will attract further investments and yield benefits many times over.
Often cited by businesses — both foreign and local — in their ideal environment would be that policies and regulations are crafted by the rule of law and are evenly and consistently applied. Predictability is one major factor for investors because they need to plan their operations, make forecasts, and consider different variables in their business operations. They also want to see a government that is run with transparency and accountability, with little to no room for corruption and other irregularities, and little to no tolerance for inefficiency.
There is also a need for blanket legislation to address regulatory hurdles commonly faced by investors. This legislation will help fast-track priority investments in the country, especially those related to infrastructure and those that are critical in generating jobs.
One viable avenue for investment-led growth would be in the manufacturing sector. Yet another Pulse Asia survey commissioned by Stratbase in the first quarter of this year revealed that an overwhelming 89% of Filipinos agree that the government should extend support to the manufacturing sector, with its capacity to accelerate economic growth and development. Respondents said that manufacturing activities are key in creating livelihood opportunities for local service businesses needed to support manufacturing operations (62%) and making goods more affordable and accessible to Filipino consumers (62%).
For this, the government must provide incentives such as income tax holidays that are tailor-fit to investors catering to both the international and domestic markets. Domestic-oriented manufacturing corporations, specifically, are equally important in spurring economic growth. They make goods more affordable and accessible to consumers and reduce our dependence on imports, thus improving our balance of trade.
Finally, in pursuing investment-driven economic growth, the Philippines should fortify its ties with its most beneficial trading and investment partners — the United States, Japan, Australia, the European Union, and the United Kingdom. This mirrors the above-mentioned survey by Pulse Asia which identified the United States (74%), Japan (55%), Australia (46%), Canada (40%), and the European Union (26%) as the top five entities that the Marcos Jr. administration should strengthen its economic relations with.
Investments are crucial to unlocking the Philippines’ economic potential. Partnering with these economic partners and focusing on sectors that present great opportunities boost our chances of attaining investment-led growth that will pave the way for a resilient, prosperous, sustainable future for Filipinos.
Victor Andres “Dindo” C. Manhit is the president of the Stratbase ADR Institute.