Makati City: The Philippines could benefit from US President Donald Trump's decision to raise tariffs on imports, as stated by an economist from Standard Chartered.

According to Philippines News Agency, Jonathan Koh, Standard Chartered economist and foreign exchange analyst for Asia, noted that the Philippines is comparatively more insulated from the impact of higher tariffs than other countries in the region. Koh highlighted that the Philippines might see an increase in foreign direct investment (FDI) inflows, as companies explore alternative investment destinations.

"The Philippines only has a USD4 billion trade surplus with the US. So within the region if you were to pick a country that is a potential target, probably a lot of people will pick Vietnam because the trade surplus with the US increased massively," Koh explained. He also pointed out that firms from Taiwan and Korea are considering the Philippines as a viable investment location.

Koh mentioned that the Philippines could benefit from FDI inflows due to the perceived safety from tariffs. Recent reforms in the country are expected to attract more foreign investments. "I think over the last few years, the government has done quite a bit of relaxation in the Foreign Investment Act where you allow foreign investors to allow up to 100 percent of certain sectors except key critical sectors," he added.

The Republic Act (RA) 11647, signed into law in March 2022, amends RA 7042 or the Foreign Investments Act of 1991. This law permits qualified non-Philippine nationals to engage in business or invest in a domestic enterprise up to 100 percent of its capital and liberalizes the practice of professions not governed by existing special laws. It also allows full foreign ownership of small- and medium-sized enterprises.

Koh emphasized the advantages of the Philippines' English-speaking population and demographic dividend in attracting investments. "I think for the Philippines itself, one thing the Philippines has is a very strong demographic dividend. Look at the average age of the population, 25 years old, so that continues to play to the strength of the Philippines," he said. "Secondly, the majority of the population is English speaking, so that is also going to be another attractive factor for the Philippines in terms of attracting investments."