PHILIPPINE ECONOMIC managers on Tuesday wooed Japanese investors, touting the country’s “solid foundation” for recovery even as it continues to battle a Delta-driven surge in coronavirus infections.
“The impact [of the coronavirus pandemic] on the economy and the recovery program is expectedly challenging but the Philippines has a solid foundation to recover at the right time,” Socioeconomic Planning Secretary Karl Kendrick T. Chua told a virtual economic briefing conducted for Japanese investors by Sumitomo Mitsui Banking Corp.
He said the country has enjoyed a solid annual gross domestic product (GDP) growth rate of above 6% before the pandemic struck. In 2020, GDP plunged by a record 9.6%.
Mr. Chua said the economy has started to recover with GDP registering 11.8% growth in the second quarter, with more relaxed quarantine restrictions and a pickup in its vaccine rollout.
“With everyone’s cooperation, we believe we will recover strongly and regain the pre-pandemic growth momentum towards a better life for every Filipino,” Mr. Chua said.
Meanwhile, Finance Secretary Carlos G. Dominguez III said tax reforms, improved tax administration and prudent fiscal management amid the crisis helped the country maintain a robust fiscal position for a protracted battle against the pandemic.
Mr. Dominguez said that the government has a plan for its fiscal consolidation efforts next year which will address potential fiscal and economic risks arising from the crisis.
“I invite you to take a closer look at the Philippine economy with all its potential and opportunities, and take part in its strong resurgence this year and beyond,” Mr. Dominguez told the Japanese investors at the same forum.
Further, the Finance chief said the administration will continue to push for the remaining tax bills under its Comprehensive Tax Reform Program (CTRP), which aim to improve the real property valuation system and reform the taxation on passive income and financial intermediaries.
He also cited the lower corporate income tax rate and a new fiscal incentives system that will improve the investment environment.
“The Duterte administration intends to consistently observe fiscal responsibility as we blaze a clearer path to recovery,” Mr. Dominguez said.
The government will also continue pursuing its flagship infrastructure program and maintain public infrastructure spending equivalent to at least five of GDP to stimulate growth and restore jobs, according to Mr. Chua.
Japan is among the country’s biggest trading partners, being the top export trading partner with $10 billion in total goods exported in 2020, and the second-highest source of imports worth $8.6 billion last year.
It also remained the largest source of foreign loans of the Philippines with outstanding grants and loans of $11.18 billion as of 2020, making up 36.4% of the total official development assistance portfolio.
Meanwhile, the central bank welcomed the move by Japan Credit Rating Agency (JCR) to retain the country’s rating at “A-” is a welcome development as it could boost Japanese investor appetite for Samurai bonds.
“The A- rating from JCR bodes well for the Philippine government’s future issuances of Samurai bonds, as some Japanese funds invest only in government securities issued by sovereigns that have a rating of at least A-,” the BSP said in a statement on Tuesday.
Sought for comment, National Treasurer Rosalia V. de Leon in a Viber message said they do not see another Samurai bond offering anytime soon yet.
In March, the Philippines raised JPY55 billion (P24.2 billion) through its offering of three-year yen-denominated bond offerings. It has a coupon rate of 0.001% — B.M.Laforga with inputs from L.W.T.Noble