Country risk in the Philippines is low to moderate. The OECD gives the Philippines a country credit rating of 3, which indicates a relatively low to moderate likelihood that this country will be unable or unwilling to meet its external debt obligations in a systemic sense—though, individual debtors can and do default. Despite the robust economic performance and sanguine outlook, the unstable political outlook combined with a relatively volatile business environment poses risks to investors.
The Philippines has an ease of doing business rank of 124 out of 190 economies. They outperform the emerging Asian average when it comes to resolving insolvencies, paying taxes and accessing electricity. But starting a business, getting credit, protecting minority investors and enforcing contracts are more difficult.
There is low to moderate risk of expropriation in the Philippines. Indeed, the Philippines goes further than most countries and compensates any expropriation at fair market value in the currency in which the investment was made. However, several mine closures in early 2017 due to changes in environmental regulations highlight contract alteration risks, particularly in the mining space.
Political risk is moderate. Political stability has long been hampered by political turmoil and ongoing security issues. The Philippines ranks poorly on the World Bank’s measure of political stability and absence of violence. Most other governance scores are broadly in line with the emerging Asia average.