The Philippines needs to invest in more infrastructure, lower energy costs and streamline business process to bring in more foreign direct investments, a bank official said.
In an economic briefing last week, Banco de Oro vice president and chief market strategist Jonas Ravelas identified these areas as key strategies for a road map to fuller economic growth for the country.
The same formula is also applicable for Cebu, he said.
Ravelas said that despite the present economic turmoil in Europe and the United States, the Philippines will still grow by five percent to six percent this year up to 2012.
“The country has shown strong market fundamentals based on the forecasts from the Banco de Oro Universal Bank (BDO). We are optimistic about the prospects for this year. However, we expect a challenging quarter,” Ravelas said.
Last quarter performance will depend on the government’s action on infrastructure and the high cost of energy.
“The government must invest more in infrastructure that will encourage growth in other sectors. Power, infrastructure, agribusiness, tourism, outsourcing and electronics can grow more with support infrastructure,” he said.
He said banks have high liquidity, meaning a lot of available cash for investment.
This is the right time for availing of loans to take advantage of low interest rates, said Ravelas.
“There is so much domestic liquidity that can be tapped for major infrastructure projects like roads which can be arranged according to President Aquino’s thrust in promoting private-public partnership,” said the BDO official.
Ravedas said inflation rate is expected to end at 4.7 percent this year and go down to 4.5 percent next year.
The foreign exchange rate will settle at P38 to P39 to a dollar over the next two years due to problems in Europe, said Ravelas.
“We are looking at an exchange rate of P43.80 to a dollar by the end of the year depending on how Europe will play out over the next two weeks,” he said.
The global growth rate is forecast to slow down to four percent while the Philippines is expected to end 2011 between five percent to six percent.
“We have agribusiness, consumer durables, construction and real estate, education, health, beauty and wellness as our ‘sunrise’ industries which will grow more if the government puts in the road map,” said Ravelas.
Canadian Chamber of Commerce of the Philippines president Julian Payne agreed with the analysis, adding that the Phililippines needs more foreign direct investments (FDIs) to improve its competitiveness in Asia, a high growth area.
He called for “streamlining of businesses with policies that make it easier for investors to comply.”
“This will make the Philippines more attractive to investors coupled with the right infrastructure and lower operating costs through lower energy costs, labor costs and more,” Payne said./REporter Aileen Garcia-Yap