THE PHILIPPINES is relatively well-positioned to reap the benefits of ASEAN's upcoming economic integration but reforms must continue to make the country a more competitive investment destination.

Speakers at the Financial Times-First Metro Investment Corp. Philippines Investment Summit, held yesterday at the Mandarin Oriental Hotel in Makati City, said were plenty of opportunities for the Philippines even as domestic development constraints remained.

"The Philippines has a lot of upsides once integration comes into the picture, especially in human resources, with its favorable demographic profile ... and the external strength of the economy," Finance Secretary Cesar V. Purisima said in a keynote speech.

Ayala Corp. Chairman and CEO Jaime Augusto Zobel de Ayala said integration would give the Philippines an opportunity to become "more relevant in a global context," opening up more opportunities for cross-border partnerships.

"There's an exciting opportunity in the ASEAN area ... But there are still challenges with respect to the institutional infrastructure of the region as a whole. So the private sector will need to work together, build opportunities together," Mr. Zobel de Ayala said in a panel discussion.

Asian Development Bank vice-president Stephen Groff noted: "There will be winners and losers once integration comes, so adjustment programs, safety nets must be in place."

Analysts and government officials alike said that for the Philippines, areas that need to be improved include the business climate and the manufacturing and agriculture sectors.

"We are seeing change in the Philippines," Mr. Groff said. "Investment levels, especially in infrastructure, however, need to be raised and made sustainable."

Socioeconomic Planning Secretary Arsenio M. Balisacan said integration would give the Philippines "an opportunity to push itself harder."

"With 2015 just around the corner, we have to start making improvements ... For agriculture, there is a need to raise investments in infrastructure in rural areas to raise productivity and generate more jobs. Manufacturing, too, because that's where we can generate high-quality jobs," Mr. Balisacan noted.

Mr. Zobel de Ayala said investment-led growth remained lacking.

"Manufacturing can be a building block for the economy. We're very competitive, especially in terms of our labor rates. We also have excellent productivity. With China's advantages diminishing, there is an opportunity for the Philippines. But it should address challenges to the investment climate, especially in the energy and transport sectors," he said.

Ateneo de Manila University economist Cielito F. Habito also noted that the country's foreign investment restrictions had hindered businesses from coming into the country.

"[T]hese foreign direct investments are capital investments that are long term in nature," he said.

Speakers noted that reforms were also needed on the macroeconomic side.

"Our own goal has always been to keep our own house in order and strengthen it so that when shocks do occur, we have buffers to shield us. Recently our efforts to keep our house in order have gained more urgency in light of our preparations for ASEAN economic and financial integration," Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr. said.

"The BSP recognizes the potential of integration but we likewise remain cognizant of the challenges that this initiative entails ... The BSP has prepared the groundwork by creating a stable macroeconomic environment and putting in place a sound regulatory framework consistent with the global reform agenda," he added.

Mr. Purisima said: "Economic fundamentals are very important in dealing with cycles ... For our part, we are continuing to pursue our fiscal consolidation program, our debt profile ... to make our country less vulnerable to external shocks."

"We need to continue down this path. We cannot put our guards down. We need to continue to focus on the policy initiatives that got us back to where we should be ... [This growth story is] only going to be sustained and be for real if we work together..."

Moody Investors Service senior vice-president Christian de Guzman said: "The country has done a very good job and outperformed expectations... But we do have small window of time ... The big question is if the country will revert to Philippines of old. But there are certain things different this time around, especially in terms of macroeconomic stability and fiscal transparency."

By bworldonline.com

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