Next leaders urged to promote an investment-driven economy

MANILA, Philippines — The Philippines must now pivot to an investment-driven economy from a consumer-driven one to make it sustainable and resilient to future economic shocks, business leaders said.

In a roundtable forum organized by local think tank Stratbase ADR Institute, businessmen urged the next administration to encourage the private sector to invest in endeavors that create jobs, provide income security, and alleviate poverty.

“We need investments by the private sector because they are integral to national development,” said Stratbase president Dindo Manhit.

He also underscored the importance of transparency in attracting investments. “Transparency breeds good governance, which in turn creates the public trust needed by a national leadership to bring the country forward to sustainable recovery post-elections and post-pandemic.”

Ernest Bower IV, president and CEO of BowerGroupAsia, pointed out that the Philippines, relative to its neighbors, had traditionally leaned toward a more protective posture, focusing on protecting domestic business instead of enlarging the economy and encouraging national champions to scale and become regional and global leaders.

“A new administration with confidence and a strong partnership with business can change that situation and drive new opportunities, equitable growth … creating jobs and driving more prosperity than ever before,” he said.

Investment-led growth has always been the goal of public policy because it promotes sustainable and resilient economic growth, said former Bangko Sentral deputy governor Diwa Guinigundo.

“Investments could also help prepare economies to transition to the post-pandemic world. In particular, investments help alleviate economic scarring from labor productivity loss by helping people get back to work,” he said in his paper launched during the forum.

Still, the main challenge for the next administration is creating an environment that is conducive to investment, whether foreign or domestic.

“Pursuing policies that promote investments could therefore help the Philippines address the health and economic ramifications of the pandemic, and in the process, strengthen the economy’s traction toward early and quick recovery,” Guinigundo said.

“Attracting investments implies the need for a public-private sector collaboration and an interrelated set of policy responses and recommendations that recognizes and cuts through the following: reinvigorating investment performance, role of good institutions, better infrastructure, the digital imperative, green sustainable finance, and the role of legislative measures in attracting investments,” he said.

“The private sector can lead in the innovation of digital products and services that would allow the increase of the breadth and reach of markets even in these difficult times. Banks can be skewed to digital banking to reduce transaction costs, improve services, and reduce viral transmission.”

“Economic and business activities could also make use of higher levels of investments to make them more sustainable and self-sustaining. It is therefore imperative to implement policy measures that would attract domestic investments, both public and private, as well as foreign,” he added.

For his part, Makati Business Club chairman Edgar Chua emphasized the role of the private sector in strengthening democratic institutions and liberalizing the economy.

On the other hand, Sharon Dayoan, president and co-founder of the Filipina CEO Circle, also said the new administration needs to make the Philippines an attractive investment destination to encourage more foreign direct investments with strong macroeconomic fundamentals and a stable regulatory environment.