The Philippines may entail upsides from the Russia-Ukraine crisis as investors from Central and Easter Europe may shift to other markets to do business as part of their relocation and diversification, according to the Board of Investments (BOI).
At the virtual SNAP Conversations, BOI Managing Head Ceferino S. Rodolfo said that aside from the pandemic, the agency is also monitoring the developments in the Russia and Ukraine crisis.
“Despite its possible economic fallout to many countries, including the Philippines, the conflict could still entail upsides for the Philippines, as it may push investors from Central and Eastern Europe to look for another market to do business as part of their relocation and diversification,” said Rodolfo. He, however, warned against sounding like an opportunistic stressing that "In general, an unstable global economic environment will not benefit anyone."
Rodolfo said the Philippines must use this challenge/opportunity to attract more investments in renewable energy and to catch more manufacturing ventures to strengthen the country’s presence in global value chain that maybe looking for a safer haven. He was referring to potential investments in light manufacturing and electronics.
He noted of European factories in China that because of the pandemic have sought others locations, including Central and Eastern European countries as these are the most cost competitive in Europe.
He also said that the conflict has already triggered the surge of food and fuel prices and supply disruption as the two major ramifications of the said crisis.
Rodolfo further pointed out that the Philippine Gross Domestic Product (GDP) growth this year is expected to go up, hovering around seven percent, according to the data provided by the IHS Markit. Such growth in the GDP is beefed up by strengthening domestic demand, he added.
“We are ready to Make it Happen for you in the Philippines,” said Rodolfo as the BOI is expecting a better year for the Philippine economy in 2022, with the easing of health restrictions and allowing the entry of fully vaccinated foreigners for business or tourism purposes.
Rodolfo also discussed some of the major policy reforms are the economic measures to improve the business environment in the Philippines namely: the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act and the amendments to the Public Service Act (PSA), the Foreign Investments Act (FIA), and the Retail Trade Liberalization Act (RTLA).
As to the Strategic Investment Priorities Plan (SIPP), Rodolfo said it is still pending and being finalized. He explained that the SIPP is divided into three tiers. Tier I are preferred activities, export-oriented, and special laws, which are already under the IPP 2020 – serving as the interim SIPP to make sure that there is no gap in terms of investments coming into the country. Under Tier 2 are activities that fill in gaps in the Philippine Industrial value chains for a competitive and resilient economy while Tier 3 promotes innovation critical to structural transformation.
As the world is shifting toward a green economy and supply chain, Rodolfo also emphasized the need for the processing of critical elements for green technology such as nickel, copper, and cobalt, which all are abundant in the country. With the processing of such minerals, it will be advantageous to the Philippines, for the world is now focusing on renewable energy, leveling the playing field for alternative sources of energy.
In addition, Rodolfo expressed hopes that the Senate will finally ratify the Regional Comprehensive Economic Partnership (RCEP). “We are still hopeful we could still have the window for having the RCEP ratified,” he said.