Corruption Threatens Philippines' Business Environment but Conflict Risks Decrease

Endemic corruption and powerful interests of politically-connected families pose notable challenges to the Philippines' government efficiency and institutional transparency, according to Maplecroft, noting that President Benigno Aquino’s attempts at reforms will be stymied by a lack of administrative capability.


Economic growth in the Philippines is expected to remain steady, with GDP growth expected to increase from 6.6% in 2014 to 6.9% in 2015. This is due in part to considerable foreign investment in natural resources such as oil and gas, as well as significant growth in manufacturing and business processing outsourcing sectors.


Maplecroft says increasing foreign investment in the Philippines, particularly from the European Union, and greater integration with ASEAN by 2015 bode well for the country’s economy.


At the same time, the Philippines’ business and regulatory environment continues to be undermined by poor property rights and weak infrastructure, particularly regarding the lack of reliable energy supplies.


"Low-level conflict in the southern Philippines is set to continue in the medium term. The realisation of a peace agreement between the Moro Islamic Liberation Front (MILF) and the government is a positive step. At the same time, break-away members of the MILF will continue to pose moderate risks. Communist insurgencies continue to pose a threat across parts of the Philippines, commonly targeting extractives and construction companies," says Maplecroft.


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