Seated (L to R): Senator Mark Villar; Special Assistant to the Secretary Antonio Lagdameo Jr.; Finance Secretary Benjamin E. Diokno; President Ferdinand R. Marcos Jr.; Former President Gloria Macapagal Arroyo; Mr. Sabin Aboitiz (President and CEO of Aboitiz Equity Ventures Inc.); Socioeconomic Planning Secretary Arsenio M. Balisacan; and House Speaker Ferdinand Martin Romualdez
Standing (L to R): Mr. Lance Gokongwei (CEO of JG Summit Holdings Inc.); Mr. Kevin Tan (CEO of Alliance Global Group Inc.); Mr. John Xefos (Vice Chairman, GIB Capital); Mr. Ramon S. Ang (CEO of San Miguel Corporation); Mr. Shailendra Singh (Managing Director of Sequoia Capital); Ms. Shweta Rajpal Kohli (Chief Public Officer of Sequoia Capital); Mr. Dieter Turowski (Chairman of Investment Banking at Morgan Stanley); Mr. Gokul Laroia (Chairman of Morgan Stanley for the Asia Pacific Region); Mr. Bill Meaney (CEO of Iron Mountain); Trade and Industry Secretary Alfredo Pascual; Mr. Enrique Razon Jr. (Chairman of International Container Terminal Services, Inc.); Jaime Zobel de Ayala (Chairman and CEO of Ayala Corporation); and Transportation Secretary Jaime Bautista
Finance Secretary Benjamin Diokno briefed World Economic Forum (WEF) Chief Executive Officers (CEOs) on the current state of the Philippine economy, as well as the proposed Maharlika Investment Fund.
At a Breakfast Interaction with President Ferdinand R. Marcos, Jr. and the economic managers on January 18, 2023 at the Hotel Belvedere in Switzerland, Secretary Diokno detailed the Philippine economy’s strong macroeconomic fundamentals and well-crafted structural reforms that have enabled the country to withstand the effects of the COVID-19 pandemic.
“Our daring economic goals are supported by structural reforms that remove barriers to foreign investments, further open economic sectors to foreign equity, improve the ease of doing business, and allow for modern, transformative industries to take root and grow,” he said with regard to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act; the amendments to the Retail Trade Liberalization Act (RTLA), Foreign Investments Act (FIA), Public Service Act (PSA); the liberalization of the renewable energy sector; and the implementing rules and regulations (IRR) of the Build-Operate-Transfer (BOT) law.
“These all form the scaffolding for rapid and sustained growth for the Philippines,” he added.
The Philippine economy at a glance
For the first three quarters of 2022, average growth reached 7.7 percent, surpassing the full-year target of 6.5 to 7.5 percent. The Philippine economy outperformed Indonesia, Singapore, and China.
All major production sectors registered positive growth, suggesting broad-based expansion despite the increase in international and domestic commodity prices. This was led by Services (9.1 percent), followed by Industry (5.8 percent), and Agriculture (2.2 percent).
In particular, growth in Services was driven by Trade (8.7 percent) and Transportation and storage (25.9 percent), reflecting the increase in household consumption and the continued reopening of the economy.
Meanwhile, domestic aggregate demand, which expanded by 10.8 percent due to strong household consumption (8.9 percent) and investments (21.1 percent), remained to be an engine of growth for the first three quarters of 2022.
The Philippines’ strong economic recovery was also seen in the drop in unemployment rate, which decreased to 4.2 percent—the lowest since 2005 and lower than the pre-pandemic level of 4.5 percent.
On foreign direct investment (FDI), the Philippines raked in record-high net FDI inflows of US$12.4 billion in 2021. For the first ten months of 2022, net FDI inflows have reached US$7.6 billion.
Gross international reserves (GIR), on the other hand, remain at a healthy level. As of end-December 2022, GIR stood at US$96 billion, which means that the country has enough to pay for 7.3 months’ worth of imports. This figure is well above the International Monetary Fund (IMF)’s reserve adequacy metric and higher than selected Asian and emerging economies.
From January to November 2022, revenue collections have already reached PHP3.28 trillion, which is 18.1 percent higher than the collection for the same period in 2021. The country is now at 99.2 percent of its full-year target for 2022.
“All these signs indicate that we have adequate buffers against external headwinds and that our economy is resilient, agile, and primed for new heights,” said Secretary Diokno before WEF CEOs.
What’s next for the Philippines
Secretary Diokno announced that the country is launching the Maharlika Investment Fund (MIF), the Philippines’ first-ever sovereign wealth fund that will support the government’s economic and social transformation strategies to reinvigorate job creation and accelerate poverty reduction through inclusive economic growth.
The MIF is a tool to diversify the country’s financial portfolio, which includes existing institutions pursuing investment activities. The Fund will specifically be used for investments with high returns, and for infrastructure development.
Secretary Diokno said that this will be an important instrument to generate consistent and stable investment returns in order to build a more prosperous economy for the future generations.
The highest standards of accountability, sound financial management, and good governance will be observed following the creation of the MIF. Safeguarding measures will be strictly implemented to help protect the people’s fund.
President Marcos, Jr. ended the session with his closing remarks.