ECCP: Trade, investment to rise in next 4 years

By Aubrey Rose A. Inosante, Reporter

ABOUT EIGHT of 10 European companies operating in the Philippines expect trade and investment activity to increase over the next four years, the European Chamber of Commerce of the Philippines (ECCP) said, even as a corruption scandal involving flood control projects continues to weigh on investor sentiment.

The findings were part of the ECCP’s 2025 Business Sentiment Survey Report released on Thursday that gathered 172 responses from member companies from October to early November.

The chamber said 78.5% of respondents anticipate higher trade and investment activity in the next two to four years, while 20.3% expect conditions to remain steady — reflecting what it described as a “sustained commitment to the market even in the absence of expansion.”

Only 1.2% foresee weaker trade and investment in the medium term.

In the near term, sentiment is similarly upbeat. Over the next 12 months, 70.3% expect business activity to rise, while 26.7% foresee no change. Just 2.9% anticipate a decline.

The relatively positive outlook comes amid what economic managers have described as a temporary drag caused by revelations of widespread graft in public works, particularly flood control infrastructure.

The scandal has slowed government spending, disrupted project pipelines and contributed to weaker investor and consumer confidence.

Asian Development Bank Country Director for the Philippines Andrew Jeffries said several tailwinds could support a rebound next year, including monetary easing and strength in services, which account for 60% of employment.

“Macroeconomic fundamentals remain broadly sound. Nonperforming loans have actually decreased,” he said. But he added that the sharp fall in public infrastructure spending is the biggest drag on growth this year. “The number one driver for next year is getting infrastructure spending back on track.”

RECOVERY EXPECTATIONS
ECCP members cited expectations of economic recovery as a major factor behind their expansion. About 51.7% of the respondents pointed to Philippine growth prospects as a key driver of future business activity, while 42.4% expect these opportunities to become significant in the next two to three years.

The outlook comes after a weaker-than-expected 4% economic growth in the third quarter, bringing year-to-date growth to 5%, as household consumption and government spending slowed due to the corruption controversy.

Only 5.8% said economic recovery would not factor into their expansion considerations.

Political and policy conditions were also central to investor sentiment. About 45.4% of companies said stability in government and politics underpins their expansion plans, while 48.8% expect it to become an increasingly significant factor. A small group — 5.8% — said it is not a key consideration.

“Political and policy stability is a critical driver for foreign investment, as it reduces risks and provides predictability for long-term planning,” the chamber said.

European companies reported a more nuanced view of the Philippines’ overall investment environment. The report found that 59% said the country had become more attractive in the past two years compared with other markets in the region, while 40.1% cited improvements specifically tied to their investment decisions. More than a quarter said conditions were unchanged, and 29.1% reported diminished appeal.

As a supplier market, the country fared weaker: 36% noted gains, 40.7% saw no change, and 18.6% reported deterioration. The Philippines performed relatively better as a sales market, with 46.5% citing improved attractiveness, 35.5% noting stability and 13.4% signaling a decline.

“The data suggest that while the Philippines is increasingly recognized as a promising market — particularly for sales and overall business opportunities — perceptions of its investment and supplier potential remain more mixed,” ECCP said.

Companies may be prioritizing market access and revenue growth while exercising caution on long-term commitments and supply-chain integration.

Despite generally optimistic sentiment, 90.1% of companies said significant barriers continue to hinder trade, investment or business operations in the Philippines. Only 9.9% reported no major obstacles.

The top challenges cited include lack of harmonized standards, complex taxation processes — such as value-added tax refunds, audits and other Bureau of Internal Revenue procedures — and cumbersome Customs rules. These issues highlight “regulatory and procedural inefficiencies,” ECCP said.

Other obstacles include unfair competition, geopolitical risks, rising protectionist measures, limited liberalization in services and gaps in green supply chains.

Among companies engaged in trade, only 18% described Customs procedures as speedy and efficient; 48% said they were acceptable but need improvement, while 34% found them burdensome.

ECCP, a multilateral chamber promoting European-Philippine business ties, represents more than 900 member companies.