Philippines

Country risk

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. That said, sub-sovereign entities and individual debtors can and do default.

The Philippines has an ease of doing business rank of 95 out of 190 economies. The Philippines outperforms emerging Asian peers on resolving insolvencies and accessing electricity. But starting a business, getting credit and enforcing contracts are generally more difficult than regional peers.

There is low to moderate risk of expropriation in the Philippines. The Philippines compensates any expropriation at fair market value in the currency in which the investment is made. However, several mine closures in early 2017 due to changes in environmental regulations highlight contract alteration risks, particularly in the mining industry.

Political risk is moderate. The government’s ongoing focus on security and illegal drugs, and other political controversies, poses a risk to the operating environment. The Philippines ranks low on the World Bank’s measure of political stability and absence of violence. But domestic politics, on its own, has not weighed on economic growth or derailed fiscal reform. President Rodrigo Duterte’s strong mandate will continue to help him implement legislation relating to the post-pandemic recovery and other elements of his policy agenda in the remainder of his term. Most other governance scores are broadly in line with the emerging Asia average.