Towards Sustainable Transformations and Inclusive Growth:
Challenges and Opportunities
Arsenio M. Balisacan, PhD
Secretary
National Economic and Development Authority
12th Arangkada Philippines Forum
Grant Mariott Ballroom
25 October 2023 | 9:30AM
<Salutations>
Distinguished officials and representatives from the Joint Foreign
Chambers of the Philippines,
Members of the diplomatic community
Colleagues in government,
Friends in civil society and the private sector,
And the media,
Ladies and gentlemen,
Good morning!
Let me begin by stating that it is an honor to be invited by the Joint Foreign Chambers of the Philippines to deliver this keynote address at the 12th Anniversary Forum of Arangkada Philippines. Allow me to discuss the strategies and targets of the Marcos Administration aimed at fostering sustained, inclusive growth and attaining its development objectives. Let me focus on investment and partnership opportunities and the economic policy and legislative reforms we are pursuing.
Flashed in the screen is the outline of my presentation, which covers both short- and medium-term considerations. I will discuss strategies outlined in the Philippine Development Plan 2023-2028 and the ongoing efforts to reform the country’s investment ecosystem and address the business community’s concerns.
The Philippine economy as you may have heard already, has been one of the fastest-growing economies in Asia in recent years, with only a brief interruption in 2020 due to the pandemic and our policy responses to it. In the past decade, the economy has sustained a high gross domestic product or GDP growth rate, mostly above six percent – an acceleration compared to the country’s historical norm. Notwithstanding domestic and external headwinds, our economy grew by 5.3% in the first half of 2023, which is still one of the fastest growth rates in the region.
However, there are several domestic and external risks to sustaining inclusive growth. First, inflation reduces households’ purchasing power and puts upward pressure on wages and interest rates, potentially dampening investment and growth prospects. Second is public underspending, which leads to gaps or delays in implementing programs and projects. Geopolitical conflicts in many regions are a third factor that may result in supply bottlenecks and financial shocks.
Still, while we have not escaped the broad-based downgrade in growth outlooks for Asia and the world, the prospects for the Philippine economy remain among the brightest in the region for 2023 and 2024, as projected by various multilateral institutions such as the IMF, World Bank, and ADB.
However, to ensure a robust recovery and sustain its high-growth trajectory in the medium term, the Philippine economy must significantly increase investment to match or surpass its dynamic neighbors’ economic momentum. While the past decade has seen a steady build-up of investment, we have yet to regain the trajectory pre-pandemic.
Foreign direct investment has risen relative to its historical averages. Still, we must do more to foster a favorable business climate underpinned by an enabling policy and regulatory environment.
From a longer-term development perspective, the Philippine economy is poised to benefit from the country’s demographic transition, which refers to the increasing proportion of its working-age population to the total population. With a young, vibrant, educated workforce, we can anticipate increased productivity and a consistent demand for consumer goods and investments. This so-called demographic “sweet spot” will contribute to the economy’s growth prospects for the next two to three decades. But for the demographic transition to prove a boon to the economy, we must address the pandemic’s profound scarring effects on learning and skills formation, improve labor market conditions, and ramp up employment-creating investments.
The Marcos Administration formulated the Philippine Development Plan 2023-2028 as its development blueprint for the next six years. This document outlines the strategies, policies, and legislative priorities to address pressing short-term issues and the constraints to rapid, sustained, and inclusive growth.
The PDP sets ambitious targets. It aims for nothing less than economic transformation, intending to create a prosperous, inclusive, and resilient society consistent with Ambisyon Natin 2040, the country’s long-term development vision. For example, recall that we aim for 6.5%-8% annual GDP growth in the medium term and a single-digit poverty incidence by 2028. Despite the external headwinds and domestic challenges, these targets are still achievable.
The PDP’s priorities are aligned with achieving the Sustainable Development Goals. These include advancing R&D, technology, and innovation, accelerating climate action, and, strengthening disaster resilience, as well as promoting trade and investments.
The Marcos Administration will vigorously implement the strategies outlined in the PDP to create a more conducive regulatory and policy environment and sustain the growth momentum. The following measures, flashed on the screen, have been passed in Congress, and the Executive branch has implemented other critical reform and policy initiatives. These initiatives aim to make the Philippines an attractive destination for investors, particularly in the infrastructure, technology, and energy sectors. We expect these sectors to drive the country’s sustainable development.
I am pleased to share that we have revamped the governing frameworks for high-impact public-private partnerships, or PPPs, in the investment ecosystem. The Revised 2022 Implementing Rules and Regulations or IRR of the Build-Operate-Transfer or BOT Law addresses various concerns from private-sector stakeholders regarding financial viability and implementation ambiguity. The upcoming amendment to the BOT Law otherwise known as the PPP Code reflects the features of the revised IRR and shall be a landmark piece of legislation for this Administration. It aims to harmonize all legal, policy, and regulatory frameworks in developing, implementing, and monitoring PPP projects, focusing on balancing public and private-sector objectives.
Additionally, the Investment Coordination Committee Guidelines for PPP projects outline the approval process for these projects. The last item on the list is the 2023 Revised NEDA Joint Venture Guidelines, which aim to ensure the full participation of our partners in the joint construction and operation of infrastructure projects.
The Office of the President is finalizing the Executive Order on Expediting the Processing of Documentary Requirements for the Infrastructure Flagship Projects, or IFPs. The EO aims to simplify the requirements and clearances needed by implementing agencies for priority infrastructure projects. It also ensures the automatic approval of any pending application or request, provided all conditions and payments have been fully complied with.
As you can see, private sector participation in implementing and formulating PPPs will remain critical for both physical and social infrastructure.
As of October 6, 105 profitable PPP projects are in the pipeline, worth approximately 2.52 trillion pesos (45 billion US dollars). Most of these are in the transport, road, and property development sectors. Other PPP opportunities in social infrastructure include health, solid waste management, and water and sanitation.
The government’s extensive ‘Build-Better-More’ program includes 197 infrastructure flagship projects or IFPs, a list of big-ticket projects worth about 8.74 trillion pesos (155 billion US dollars). These projects span different sectors, including physical and digital connectivity, water resources, agriculture, health, power, and energy. The transformative and game-changing projects included in this list will benefit from expedited approval processes and higher prioritization in government spending. Eighty-eight of these projects are still undergoing various stages of preparation in which the private sector may participate.
The Marcos Administration has been proactively addressing bottlenecks in the timely completion of these IFPs. We aim to substantially implement these projects, if not complete, by 2028.
We have demonstrated our commitment to turning crucial IFP and PPP projects into reality through our regular NEDA Board meetings at least once a month. The President chairs the NEDA Board, with the NEDA Secretary serving as the vice chair. Under the Marcos Administration, the average processing period for the following PPP projects was 40 days, half of the prescribed maximum working day processing period. We have already approved five PPP projects under this Administration, including the Ninoy Aquino International Airport, the Tarlac-Pangasinan-La Union Expressway Extension, and the newly approved Dialysis Renal Center for the Baguio General Hospital and Medical Center.
The timely approval of these PPP projects highlights our reforms’ effectiveness and our institutions’ commitment to driving the Administration’s socioeconomic agenda. We are partnering with the private sector to continue realizing these high-impact projects.
The next generation of reforms will cover critical areas and sectors such as telecommunications, energy, mining, procurement, land use, and fiscal incentives. These reforms will build on our hard-won gains and initiatives, enabling the transformation of our economic sectors and ensuring sustained, inclusive growth. These upcoming reforms including Corporate Recovery and Tax Incentives for Enterprises or CREATE Act aim to facilitate more significant investment, enhance efficiency and productivity, and promote private-sector activity.
We invite you, business and financial community members, and our development partners to continue investing in the numerous opportunities that have emerged in our economy. These sectors include energy, water and sanitation, airports, logistics, telecommunications, expressways, railways, hospitals, schools, and housing.
Additionally, we encourage you to explore our present and emerging growth drivers, such as agribusiness, mining, manufacturing, education, tourism, health, construction, creatives, and IT-BPM.
I invite you to scan the QR codes displayed on the screen to access the complete PDP 2023-2028 version and the full list and details of the 197 IFPs.
As I conclude, I would like to express my sincere hope that we strive towards a sustainable and inclusive future that is in line with our AmBisyon—the national vision of a matatag, maginhawa, at panatag na buhay that all Filipinos will enjoy in the coming years and decades.
Thank you once again to all of you, and have a good day.