Biz leaders call for sustaining momentum-A A +A
Tuesday, April 2, 2013
ALTHOUGH expressing confidence on the Philippine’s first investment grade credit rating, local business officials are calling for government to address barriers that may impact on sustaining that achievement.
Seeing the Fitch upgrade as expected with immediate impact such as low interest rates and sparking growth in the stock market, Cebu Chamber of Commerce and Industry (CCCI) Lito Maderazo said the accomplishment does not necessarily give long term economic influence.
“The government still needs to make the country attractive to foreign direct investments. This means more infrastructure, lower cost and reliable power, competitive transportation and more importantly, less red tape and ease in doing business,” he said.
Describing the upgrade as a terrific development that will reduce interest rates for sovereign debt, Cebu Business Club (CBC) president Gordon Alan Joseph agreed that the rating should increase the interest of foreign investments.
“To create more significant impact on our economy, we have to beat basic hurdles to foreign direct investment and we need to translate the increase of investment interests into actual job generating investments,” he said.
Joseph said the Philippines must work its way to get rating upgrades from the other two major agencies - Moody’s Investors Service and Standard & Poor’s (S&P) Ratings Service - which have already raised the country to one notch below investment grade last year.
Mandaue Chamber of Commerce and Industry Inc. (MCCI) president Philip Tan also said he hoped that the upgrade will trigger both foreign and local investment opportunities, business expansions and jobs generation in the country.
“The challenge here is to sustain this buoyant situation in the future, especially from this year onwards since it’s an election year,” he said.
Tan praised the Aquino administration for the recent investment grade, which he noted is a result of good governance, government transparency to projects and efforts to enable business environments.
According to Philippine Exporters Confederation Inc. (PhilExport) Cebu executive director Fred Escalona, the upgrade adds more credibility to the country which would eventually attract investors and prompt businesses to lend at lower rates. However, he observed that it doesn’t have a remarkable reaction to the dollar value, which he forecast to be locked within P40 and P41.
He suggested that the Philippines, in addressing the weakening dollar, must also extend its financial support to the export industry sector so that players would be able to effectively lead foreign investors to the country.
“If we continue to meet targets such as GDP and overseas remittances and use the upgrade to our own advantage, then the achievement can only be better for the country,” he said.
Philippine Retailers Association (PRA) Cebu director Robert Go said that with the upgrade, the Philippines can expect a deluge of investments and accelerated stocks which would bring in more money.
“We need more initiatives in line with tourism, business-friendliness, corruption issues and investments in the countryside. Countryside development can bring employment in towns, training for the youth and education in grass roots areas,” Go said.
For Filipino Cebuano Business Club (FCBC) president Rey Calooy, the impact of the upgrade will trickle down from foreign investors to small and medium enterprises (SMEs).
“Bank interests are likely to decline, resulting in depositors investing in businesses, which in the long run, will equate to jobs creation and a vibrant SME scene. It’s a domino effect,” he said.
But Calooy recommended that as foreign investors are seeing the Philippines as a potential investment destination even for small scale ventures, the government must highlight agriculture, tourism and infrastructure as new investment prospects to lure potential markets from abroad.
With its announcement on Wednesday, Fitch Ratings is the first among the three major credit ratings agency to raise the Philippines’ credit rating from BB+ to BBB-.
Political and economic reforms by the Aquino administration and the resilience of the Philippine economy amid a struggling global situation were identified as key contributors to the upgrade.
Considering the country’s stronger and more stable growth compared to other BBB- countries in the past five years, Fitch expected the Philippines to continue its bullish performance with a forecast growth of 5.5 percent this year.
Published in the Sun.Star Cebu newspaper on April 03, 2013.