Resource information
This working paper concerns the growth
of investment climate in the Philippines. There are several
resounding ideas in areas both positive and negative. The
growth potential in the Philippines is considerable. The
country has significant natural resources; a large pool of
managerial and entrepreneurial talent; and widespread
proficiency in English. The Government's Medium Term
Development Plan (MTDP), 2005-2010 sets ambitious growth and
employment targets. Recognizing the opportunity at hand, the
MTDP sets much higher growth targets than recent outcomes.
The government aims to raise GDP growth from 6.1 percent in
2004 to 8 percent by 2010; increase investments from 19
percent of GDP to 26 percent; create two million jobs
annually by 2010 and reduce the incidence of poverty from 26
percent to 19 percent. Meeting the ambitious growth targets
will mean addressing key vulnerabilities that has made the
Philippines less attractive to investors. From a long-term
perspective, the Philippine growth and social development
record could have been better. Reforms have delivered only
modest growth. Low institutional quality and poor fiscal
conditions lie behind reforms, delivering only modest growth
and private investments. The importance of the fiscal and
institutional environment is further underscored by the
Investment Climate Survey (JCS). A survey of more than 700
firms was conducted jointly by the Asian Development Bank
(ADB) and the World Bank between 2003 and 2004. The survey
confirmed the broad cross-country analysis. The two biggest
impediments to a good investment climate identified by firms
were macroeconomic instability and corruption. Electricity
supply, security and regulatory uncertainty, all related to
institutional quality also figured prominently. A deeper
analysis of the aforementioned themes is contained in this
working paper.
