Further opening the economy to foreign capital will help the Philippines recover faster from the scarring inflicted by the prolonged COVID-19 pandemic on economic growth and jobs, a World Bank economist said on Thursday.
Local banks, meanwhile, were fast-tracking their digitalization efforts in order to adapt to the new normal wrought by COVID-19 despite challenges posed by risk-aversion among borrowers at the start of the year.
During the Philippine Economic Society’s (PES) 59th annual meeting and conference, World Bank lead economist and program leader for Brunei, Malaysia, the Philippines and Thailand Souleymane Coulibaly said that the Washington-based multilateral lender expects the Philippines to achieve herd immunity or at least 70 percent of its population vaccinated by the first or second quarter of 2022, auguring well for economic reopening.
Coulibaly said there had been a “sound” implementation of the government’s vaccination program, although vaccine hesitancy remained a challenge, coupled with lags in supply deliveries.
Coulibaly added that sustained investments in the ambitious “Build, Build, Build” infrastructure program, financing made available to badly hit businesses, and development of the digital economy were helping the Philippines “slowly come back.”
But Coulibaly said that on top of the health response to fight COVID-19—testing, tracing and vaccination—as well as fiscal expansion through higher public spending, the Philippines also needed to pursue reforms to open up economic sectors limited to Filipino participation.
Coulibaly pointed to the proposed amendments in the foreign investment, public service and retail trade laws as low hanging fruits to attract more foreign capital.
On top of investments, foreigners can inject innovation into domestic industries, Coulibaly noted.
Coulibaly said these pending bills in Congress plus the implementation of the Corporate Recovery and Tax Incentives for Enterprises Law, which offered attractive tax and other perks to large investments, would present additional growth opportunities for the Philippines.
The World Bank economist also recommended supporting the fast-rising digital economy by addressing current challenges, especially internet connectivity.
Land Bank of the Philippines (Landbank) president and chief executive Cecilia Borromeo told the PES conference that the state-run lender’s digitalization was not only helping promote financial inclusion in the country but was also easing the impact of an industry-wide decline in loans.
Landbank managed to grow its net income, which as of end-September rose 21.2 percent year-on-year to P16.7 billion, partly through digitalization of processes which lowered operating expenses, Borromeo said.