THE upgraded standing of the Philippines from credit watcher Fitch Ratings sparked excitement in the business community.
From the previous BBB- rating, Fitch upgraded yesterday the Philippines’ long-term foreign-currency issuer default fating (IDR) to BBB, expressing a stable outlook.
Cebu Chamber of Commerce and Industry president Melanie Ng is optimistic about the year ahead.
“This is great news and a welcome development, considering the buoyant and optimistic economic outlook we have for the coming year. This will greatly increase our country’s investor attractiveness and hopefully boost FDIs (foreign direct investments) coming in to the country,” Ng told SunStar Cebu in a text message.
In a report released on its website, the credit rating agency noted the Philippines’ “strong and consistent macroeconomic performance” and “sound policies that are supporting high and sustainable growth rates.” “Investor sentiment has also remained strong, which is evident from solid domestic demand and inflows of foreign direct investment,” it added.
Despite the Duterte administration’s war against illegal drugs, the agency said this has not undermined investor confidence.
“There is no evidence so far that incidents of violence associated with the administration’s campaign against the illegal drug trade have undermined investor confidence,” said the credit watcher.
While this is good news for the economy, local entrepreneur and business coach Virgilio “Nonoy” Espeleta hopes that this development will benefit micro, small, and medium entrepreneurs, too.
“The upgrade of credit rating may be good only to huge corporate borrowers, as it may reduce the interest rates of foreign funding institutions,” he said.
He hopes to see conglomerates, who may avail of financing packages at cheap interest rates, to participate in the government’s Build, Build, Build program through public private partnerships (PPP).
“But if corporations do not have the appetite to invest via borrowing, such upgrade will not benefit on the economy over the short term. In fact, It will not directly impact the MSMEs, the major drivers of the economy. Unless banking institutions make cheaper funding available to MSMEs with more liberal requirements, the same is only good for the big players,” noted the CCCI vice president for business development.
“It would have been good if the upgrade is coupled with a positive atmosphere of ease in doing business, which unfortunately our country has slipped ranking back to the near bottom among ASEAN countries,” he added.
“This sends a positive signal to investors eyeing opportunities in the Philippines and hopefully will tip the decision scale in our favor,” said Department of Trade and Industry Cebu Director Maria Elena Arbon.
Mandaue Chamber and Commerce and Industry president Glenn Anthony Soco echoed the sentiment. “The key now is sustainability and further growth as we strive to reinforce our economic position in the global arena.”
The banking and BPO sectors also welcomed the news.
“This is a positive development and we’re expecting other credit rating agencies to follow next year or 2019,” said Cebu Bankers Club past president Maximo Rey Eleccion.
“With the open conflict in Marawi over plus this great news, the Philippines is moving towards better times ahead,” said Cebu IT/BPM Organization managing director Wilfredo Jun Sa-a Jr.
Read Fitch Ratings’ press release here: bit.ly/2kkG4rW