Foreign investments have been an engine of the Philippines’ economic growth since the late 20th century. As the country seeks to create better living conditions, local policymakers are hoping to ramp up foreign investments even further to increase revenues and fund projects that will benefit Filipinos.
To entice investors, policymakers must create a climate that encourages their long-term presence. Tax incentives and legal exceptions are an important part of the formula for attracting investors. However, having the right physical infrastructure also plays an important role. In this article, we will explore five infrastructure-focused strategies that can significantly attract investments and spur economic progress in the Philippines.
In the Philippines, air transportation is a critical but often overlooked foundation of economic activity. With both international and inter-island commerce moving faster than ever, the country’s few large airports are starting to hit their limits. Continued airport development will become vital for improving the country’s logistics base, consequently attracting foreign investors.
Apart from considering the construction of new international airports, policymakers should also invest in the expansion and modernization of existing facilities. After all, there is already proof that the redevelopment approach works.
With the recent entry of Aboitiz InfraCapital to the Mactan-Cebu International Airport, the company seeks to further improve the operation and maintenance of the country’s second-busiest airport by adding modern features and amenities and leveraging data science and artificial intelligence to enhance passenger comfort and logistics efficiency. This project is expected to result in more tourist arrivals and new regional investments after a few years. Duplicating this strategy in the country’s other major aviation gateways should serve to create a positive and welcoming impression for investors and tourists alike.
Mass Transit System Development
Efficient transportation within and between cities is essential for attracting investments, as it effectively expands the labor pools and logistics infrastructure that’s available to investors. Well-developed intercity and provincial mass transit systems can alleviate traffic congestion, reduce transportation costs for businesses, and improve overall mobility for citizens.
The expansion and improvement of heavy and light rail as well as bus rapid transit (BRT) networks will be key not just for attracting foreign investments but stoking domestic economic activity. This involves investing in modern and reliable rolling stock, optimizing route coverage, and integrating seamless security and payment systems to avoid congestion at stations. With the help of such efforts, businesses can benefit from improved accessibility to skilled labor pools and larger customer bases.
Green Energy Initiatives
The Philippines is fortunate to be endowed with substantial geothermal, solar, and wind resources, giving it the potential to become a regional green energy superpower. Capitalizing on these advantages through green energy initiatives presents a unique opportunity for attracting responsible investments. Moreover, these initiatives should also reduce carbon emissions and lower energy costs for businesses, making the country more attractive for investors seeking to reduce their environmental impacts.
Policymakers are already introducing incentives and policies that promote the adoption of green energy technologies. However, these could be expanded further to accelerate the country’s ability to attract environmentally conscious investors. Offering tax incentives, streamlined permitting processes, and power purchase agreements may help foster public-private partnerships for large-scale green energy developments, drawing foreign investors while also accelerating the country’s transition away from volatile energy imports.
Developing robust digital infrastructure supports e-commerce, remote work, and innovative technologies like AI and the Internet of Things (IoT), attracting tech-savvy investors in the process. If the Philippines wants to compete against ASEAN neighbors with mature digital communications infrastructure, it will need to further increase the number of local data centers and 5G infrastructure assets.
The country’s political and business leadership should invest in expanding and upgrading the country’s digital infrastructure, including fiber-optic networks, small cell sites, and common communications towers. Promoting healthy competition among internet service providers and facilitating affordable access to high-speed internet should also contribute to a healthy digital ecosystem that attracts technology-driven investments.
Port and Logistics Infrastructure
As an archipelago, the Philippines is disadvantaged when it comes to domestic transportation, relying on maritime transport to facilitate the movement of goods. Additionally, despite its strategic location, the country only has a limited number of major seaports that could accommodate international trade. A better-developed logistics network should reduce supply chain costs, improve market access, and boost the country’s attractiveness to foreign investors.
Additional investment in port facilities, implementing advanced cargo handling technologies, and streamlining customs procedures are all doable steps that will help increase the Philippines’ desirability as an investment destination. Improving connectivity between ports and major industrial zones through well-maintained roads and railways should also create a less constricted flow of goods, attracting both domestic and foreign investors looking to leverage the country’s strategic geographic location.
Alongside tax breaks and legal exemptions, infrastructure development plays a central role in attracting the foreign investors that the Philippines and other rising economies need. The best thing about the infrastructure-focused measures mentioned above is that they not only attract investments but also meaningfully improve the lives of everyday Filipinos. With that in mind, an investment strategy based on infrastructure improvements creates a win-win situation for all stakeholders involved.