3 weeks ago
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With the Philippines officially off the global money-laundering watchlist, private-sector economists believe the country has now gained a competitive edge over its ASEAN neighbors, positioning itself as a top investment hub in the region.
Bangko Sentral ng Pilipinas (BSP)-led Anti-Money Laundering Council (AMLC) said foreign banks that previously withdrew from the Philippines may soon return as the country’s official removal from the Financial Action Task Force’s (FATF) ‘grey list’ signals global confidence.
Robert Dan Roces, economist at SM Investments Corp. and former chief economist at Security Bank Corp., said that this “enhanced financial sector credibility, combined with the Philippines’ robust regulatory environment and promising market opportunities, positions the country favorably for increased foreign investment.”
“Within ASEAN, this clean FATF status further boosts the Philippines’ competitive advantage, particularly in cross-border and digital finance, adding to its robust investment profile,” Roces further said.
Similarly, Jonathan Ravelas, senior adviser at Reyes Tacandong & Co. and managing director of e-Management for Business and Marketing Services, said this development will “likely enhance the country’s competitiveness as an investment destination in Southeast Asia, positioning it more favorably compared to neighboring countries.”
Ravelas likewise said that FATF’s decision is “quite significant as it signals improved financial compliance and reduced regulatory risks, which can encourage foreign banks to re-enter the market,” echoing AMLC’s statement.
“With improved compliance standards, the Philippine financial sector is expected to become more resilient and attractive to foreign investments, enhancing financial transparency and reducing compliance barriers,” he added.
Additionally, Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said the combo of the widely expected ‘grey list’ exit and the reduction in banks’ reserve requirement ratios (RRRs) “would support market sentiment and could increase investor confidence on the country—a welcome development and among the positive leads that the markets badly needed recently, in view the Trump premium that weighed on the markets in recent weeks.”
Aside from increased foreign investment inflows into the country, Ricafort noted that the Philippines “would save more processing time and also save on transaction costs—a more desirable scenario if transactions of the country with the rest of the world move with greater ease, in terms of reduced processing requirements on OFW [Overseas Filipino Worker] remittances, foreign investments, and other foreign fund flows to the Philippines.”
Ricafort emphasized that this exit is “a vote of confidence from international regulators, which could send positive signals and further help attract more foreign investors and creditors/lenders at a lower cost to the country.”
This, he said, complements the country’s “favorable” international credit ratings, which have remained one to three notches above investment grade in recent years.
Finance Secretary Ralph G. Recto said he welcomes this development, noting that this is “a seal of good housekeeping. Next in our agenda is a credit rating upgrade.”
