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Corruption related to flood control projects have cost the Philippines up to PHP 118.5 billion in economic losses since 2023, Finance Secretary Ralph G. Recto said on Tuesday.

“Due to ‘ghost’ projects, our economy lost between PHP 42.3 billion and PHP 118.5 billion from 2023 to 2025,” Mr. Recto said in his presentation during a Senate Finance Committee hearing.

These estimated average economic losses are based on information from “anecdotal accounts” that put the extent of corruption in the Department of Public Works and Highways’ (DPWH) flood control projects at around 25% to 70% of the total project cost, the presentation showed.

These could have translated to 95,000 to 266,000 jobs for Filipinos, Mr. Recto said.

These allegedly anomalous projects not only drained public funds but also stunted economic growth in the previous years, the Finance chief said.

Philippine gross domestic product (GDP) grew by 5.5% in 2023 and 5.7% in 2024.

“We just learned that the extent of the problem with flood control is this big. Maybe if that money was spent better, we could have grown by 6%,” Mr. Recto told reporters.

“It’s a waste. The economy would have grown at a faster rate. If the money wasn’t wasted, more jobs would have been created.”

He added that the controversy could also dampen investor confidence in the Philippines.

Still, the economy remains on track to meet the government’s 5.5%-6.5% growth target for 2025 despite higher tariffs and adverse weather conditions, Mr. Recto said.

Philippine GDP grew by 5.5% in the second quarter, bringing the first-semester average to 5.4%, a tad below the state’s goal.

The government has launched a widespread probe into alleged anomalies in multibillion-peso flood control programs, which have long been flagged for irregularities as the Philippines faces more weather disturbances.

The DPWH is among the largest recipients of the national budget, securing more than PHP 900 billion this year, a substantial share of which is earmarked for flood control projects nationwide.

President Ferdinand R. Marcos, Jr. earlier said that some PHP 100 billion of the total PHP 545 billion in government funds that were allocated for flood control projects nationwide since 2022 were cornered by just 15 contractors.

Over the weekend, Mr. Marcos appointed former Transportation Secretary Vivencio “Vince” B. Dizon as the new Public Works chief after the resignation of Manuel M. Bonoan.

The President also set up an independent commission to investigate flood control anomalies to further reinforce accountability.

Mr. Recto said the government’s tax collecting agencies are ramping up their probe into the contractors that benefited from these allegedly anomalous projects.

The Bureau of Customs on Tuesday issued a search warrant for the luxury vehicles of the Discayas in Pasig City, but only two out of 12 cars were found during the search.

Among the top 15 flood-control contractors earlier identified by Mr. Marcos were Omega & Alpha Construction and St. Timothy Construction, both reportedly linked to former Pasig mayoral candidate Cezarah Rowena “Sarah” Discaya.

“The Bureau of Customs takes the issue of the missing luxury cars of Discaya with utmost seriousness. We will ensure that these vehicles are located without delay, and if discrepancies are uncovered, all taxes and duties will be collected in full,” Customs Commissioner Ariel F. Nepomuceno said in a statement.

Mr. Nepomuceno has warned that hiding or abetting the concealment of these cars will be punished to the “fullest extent of the law.”

Meanwhile, the Bureau of Internal Revenue has served letters of authority to the tagged contractors.

Analysts have long flagged corruption as one of the biggest risks to Philippine economic growth.

Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said corruption is not just a governance issue but also a direct economic cost.

“Losses in flood-control projects represent funds that could have gone to infrastructure, jobs, and social services,” Mr. Rivera said in a Viber message.

He described Mr. Recto’s estimate as “realistic,” citing the multiplier effects of efficient public spending.

“The challenge now is to tighten transparency and accountability so that public funds truly translate into inclusive growth,” he added.

Foundation for Economic Freedom President Calixto V. Chikiamco said all kinds of corruption end up as economic losses.

“Corruption exists everywhere, but it hasn’t stopped Vietnam from growing fast,” Mr. Chikiamco said in a Viber message.

Meanwhile, Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, called Mr. Recto’s statement “hypocritical” and “deceiving” as fund transfers from state-run agencies — some of which were stopped by the Supreme Court — were approved under his watch.

“Find the link between the infra projects tainted with corruption and the transfer of PhilHealth (Philippine Health Insurance Corp.) and PDIC (Philippine Deposit Insurance Corp.) funds that enabled the funding of these highly questionable projects,” he said in a Viber message.

In 2024, the government initiated the transfer of PHP 89.9 billion from PhilHealth to the National Treasury, labeling these as “excess funds.” The money was supposed to fund various projects, including infrastructure and social services.

The High Court in October issued a temporary restraining order to stop the last tranche of transfers worth PHP 29.9 billion.

Meanwhile, in January, the PDIC remitted excess funds amounting to PHP 107.23 billion to the Treasury. — Aubrey Rose A. Inosante, Reporter

Poor Filipinos will likely remain unable to afford housing even under the government’s expanded flagship program due to low wages and the lack of job security, according to a research paper published by the University of the Philippines Center for Integrative and Development Studies. 

“While the Expanded 4PH provides diverse housing options, it may still fall short in improving affordability and accessibility for the poorest and is unlikely to address broader structural barriers without broader structural reforms,” according to the study authored by Rafael Vicente V. Dimalanta, Vincent Eugenio, Abigail Roa, and Jay-R Panagsagan.

“The diversification of modalities has yet to resolve the core accessibility and affordability challenges of social housing for the poorest, shaped by broader structural issues such as low wages, precarious work, and weak land governance,” it said.

The study estimated that it would cost a total of PHP 8,324.06 monthly to avail oneself of a housing unit under the expanded Pambansang Pabahay Para sa Pilipino (4PH) Program.

This comes as a mid-range high-rise unit under the 4PH Program that costs PHP 1.5 million will require a monthly amortization of PHP 6,324.06 for the first 10 years, according to government data. The researchers said a 4PH beneficiary may incur further additional expenses related to high-rise living, such as maintenance and operational fees, which could amount to PHP 2,000.

Citing data from the Philippine Statistics Authority, the study noted that Filipino households belonging to the bottom 30% of income deciles — the “primary beneficiaries” of 4PH — earn monthly incomes of only PHP 11,940. (first decile), PHP 15,217.50 (second decile), and PHP 17,369.17 (third decile), respectively.

“Based on these figures, the housing payment for a mid-priced Expanded 4PH vertical unit would consume 59.35% of total household expenditures for the bottom 10% income earners, 49.06% for the bottom 20%, and 43.99% for the bottom 30%,” according to the study.

Many of these poor households work in the informal economy, receiving low or irregular wages while working under a short-term or contractual tenure.

The bottom 30% segment is also linked to informal settler families who cannot afford to enter the formal housing market, it added.

“Given the income and expenditure profiles of the poorest households in the lowest 30% income deciles, it is evident that the combined costs associated with the Expanded 4PH significantly exceed the financial capacity of the program’s priority beneficiaries,” according to the researchers.

Launched in 2022, the 4PH seeks to end the country’s housing backlog by building six million housing units by 2028. However, only 1,900 units have been completed under the program since its launch, Human Settlements and Urban Development Secretary Jose Ramon P. Aliling told congressmen on Monday.

The government has kept a “manageable” goal of building 300,000 houses by 2028, Mr. Aliling said, but noted that it cannot hit the target if the 4PH program itself is not strengthened.

To better support beneficiaries, the expanded 4PH program allowed both vertical and horizontal or subdivision-type housing options.

It also included rental and incremental housing to consider beneficiaries’ financial situation and revived the community mortgage financing program by the Social Housing Finance Corp.

To become a 4PH beneficiary, an individual must be a member of the Home Development Mutual Fund or Pag-IBIG Fund.

However, the study noted that this poses a barrier, especially for informal workers with stagnant and low wages.

“The program’s financing structure and restrictive criteria thus reinforce exclusion undermining its stated goal of prioritizing the poorest who are most in need of housing,” the researchers said.

The study recommended aligning the program’s socialized housing amortization and rent with the financial capacity of the poorest households to ensure that their basic needs are not compromised.

It also cited the need to increase the government’s housing budget and lessen its dependence on the private sector in constructing 4PH units to make them more affordable to poor beneficiaries.

The government must also make its eligibility criteria more flexible for irregular or informal workers, ensure the participation of urban poor groups in planning and implementation processes, and address bureaucratic delays, it said.

“These recommendations should be complemented by strengthened land governance to control speculation and the rapid escalation of land prices, which significantly hinders the government’s ability to make land available for social housing, and eventually undermines the affordability of land for social housing for the poorest.” — Beatriz Marie D. Cruz, Reporter

Investment pledges from Association of Southeast Asian Nations (ASEAN) countries have reached PHP 251.98 billion since 2020, reflecting the region’s increasing confidence in the Philippines, the Board of Investments (BoI) said.

“As we build stronger trade and investment ties with our ASEAN neighbors, these numbers reflect the growing confidence of foreign investors in the Philippines as a place for business growth,” Trade Secretary and BoI Chairperson Ma. Cristina A. Roque said in a statement on Tuesday.

“We will keep working to create a stable and welcoming business environment, one that brings in more investments and opens up real opportunities for Filipinos,” she added.

According to the BoI, Singapore has been the biggest source of investment pledges since 2020, accounting for PHP 245.97 billion of the total. The other top sources were Thailand with PHP 4.34 billion, Malaysia with PHP 1.65 billion, and Indonesia with PHP 12.27 million.

In terms of industries, around PHP 170 billion of these investments went to the information and communication sector, while PHP 74.2 billion went to the power sector.

“The BoI-approved projects from ASEAN investors, particularly those in the information and communication and the renewable energy sectors, align with the Philippines’ push for smart and sustainable manufacturing and services,” said BoI Executive Director Evariste M. Cagatan.

The other top sectors were manufacturing (PHP 5.58 billion), administrative and support services (PHP 1.41 billion), and agriculture, forestry, and fishing (PHP 930 million).

“Collectively, these projects are projected to generate 15,358 new jobs for Filipinos from 2020 up to July 2025,” the BoI said.

Meanwhile, from January to July this year, total approved investment pledges from the ASEAN region reached PHP 58.07 billion, according to the agency.

Citing a report from the Bangko Sentral ng Pilipinas, the BoI said there is also a sustained growth in foreign direct investment (FDI) inflows from Southeast Asian countries.

In the first seven months, net FDI from ASEAN reached USD 95.78 million, with investments from Singapore accounting for USD 63.61 million and Malaysia accounting for USD 31.56 million.

Moving forward, the BoI said the country’s participation in the ASEAN Investment Forum in Kuala Lumpur next month will help to further boost investments from the region.

The event is expected to showcase investment-ready projects under the ASEAN Regional Investment Promotion Action Plan 2025-2030 spanning biofuels, carbon capture and storage, medical devices, solar photovoltaic equipment, and regional supply linkages.

High production costs and labor shortages in their own countries are causing ASEAN economies to invest in the Philippines, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

He said the Philippines’ large and young population of over 114 million and leadership in the business process outsourcing sector also make it a viable market for ASEAN investors.

“The Philippines can also be an alternative, lower-cost destination for heavy industries such as shipbuilding, due to being cheaper and having a greater labor supply, such as engineers at a lower cost,” he said.

“It is also the 10^th largest market in terms of sales for some of the world’s largest consumer goods companies, making it viable for production facilities, especially for perishable products.”

Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said the increasing investments from ASEAN countries reflect deepening regional integration and confidence in the Philippines as part of intra-ASEAN supply chains.

“The relocation of production capacities, regional hedging against global uncertainties, and proximity advantages are likely drivers,” he said in a Viber message.

The US is imposing sweeping tariffs on goods coming from its major trading partners, including the Philippines and other ASEAN member states.

Mr. Rivera said ongoing infrastructure development in the Philippines under the “Build Better More” program has also enhanced the country’s attractiveness to regional investors.

“Additionally, the Regional Comprehensive Economic Partnership and ASEAN-Australia-New Zealand Free Trade Area frameworks make it easier for ASEAN firms to view the Philippines as a strategic node for manufacturing, logistics, and services expansion,” he said.

“However, these may be negated by hounding corruption issues.” — Justine Irish D. Tabile, Reporter

Philippine manufacturing activity expanded in August but at its slowest pace in two months amid a muted rise in output and new orders as the higher US tariffs took effect, S&P Global said on Monday.

The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) stood at 50.8 in August, easing from 50.9 in July.

This was the lowest PMI reading since the 50.7 reading in June.

A PMI reading above 50 denotes better operating conditions than in the preceding month, while a reading below 50 shows a deterioration.

“The Philippines manufacturing sector once again indicated a subdued performance, with growth rates for output and new orders remaining below their historical averages,” Maryam Baluch, economist at S&P Global Market Intelligence, said.

Available S&P Global data on select Association of Southeast Asian Nations members showed the Philippines had the third-highest PMI reading, behind Thailand (52.7) and Indonesia (51.5).

In the report, S&P Global noted “modest” growth in both output and new orders in August, supported by new customer acquisitions and improved demand.

Manufacturing output went up for a third straight month in August, “with the pace of increase reaching its fastest rate in four months,” it said.

“Supporting the upturn in output was a sustained rise in new business. The growth rate was broadly in line with that observed in July, with anecdotal evidence pointing to new customer acquisitions and improved underlying demand trends as driving the latest expansion,” S&P Global said.

Philippine manufacturers also noted a stronger foreign demand for goods, with the growth in orders accelerating to a seven-month high.

S&P Global said purchasing activity expanded, with August data showing the fastest rise in four months.

Ms. Baluch noted job creation was halted in August, ending two straight months of “marginal increases” in employment.

“The combination of rising production requirements and stagnant employment resulted in a further buildup of backlogs of work, with the rate of accumulation the fastest in six months,” it said.

S&P Global said manufacturing firms reported a “modest decline” in stocks of finished goods in August, as it fulfilled new orders.

“Reductions have now been noted in three of the last four survey periods, with some firms reporting that they released stock onto the market to mitigate potential damage at warehouses from heavy rainfall,” it said.

S&P Global said inflationary pressures were relatively subdued in August even as material prices rose.

“Subdued cost pressures, coupled with manufacturers’ efforts to control their pricing in a bid to remain competitive, could provide the boost firms need to regain sales momentum,” Ms. Baluch said.

Philippine manufacturers’ confidence for the next 12 months improved for a fourth straight month to its highest since November 2024.

“Firms were hopeful that demand conditions will improve and support production. However, positive sentiment remained subdued compared to the long-term series average,” S&P Global said.

Factory activity may have been affected by the implementation of the 19% tariff on many goods from the Philippines starting Aug. 7.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the slowdown was due to the US tariffs that led to a “wait-and-see attitude” for some exporters.

“(This was) partially offset by some frontloading of exports before Trump’s higher tariffs took effect on Aug. 7, 2025, as well as some seasonal increase in importation and production activities by some local manufacturers during the third quarter,” he said.

Mr. Ricafort noted the higher US tariffs could eventually slow demand for exports to the US, as well as dampen economic growth. — Aubrey Rose A. Inosante

The Bangko ng Pilipinas (BSP) is expected to continue its easing cycle until 2026 amid benign inflation and slowing economic growth, Fitch Solutions’ unit BMI said.

In a note, BMI said it expects the Monetary Board to cut its policy rate by another 25 basis points (bps) in the fourth quarter, most likely in December.

“We think BSP will maintain its policy rate at 5% in October and proceed with a 25-bp cut in December,” it said.

At its Aug. 28 meeting, the central bank delivered a 25-bp cut, bringing its policy rate to 5%. BSP Governor Eli M. Remolona, Jr. had signaled another 25-bp cut to the policy rate before the end of the year.

“But (Mr. Remolona) also described the economy as being in a ‘sweet spot,’ which we interpret as a preference to stand pat at the next meeting in October,” BMI said.

BMI said the BSP could regain some policy space by holding rates steady, as the US Federal Reserve is expected to cut rates in September.

“Easing inflationary pressure towards the end of 2025 will provide the central bank with the space to cut,” it said.

BMI expects inflation to average 1.6% this year, slightly below the central bank’s 1.7% projection.

For 2026, BMI said it now forecasts the BSP to deliver 50 bps worth of rate cuts in 2026, instead of 25 bps previously. This would bring the key rate to 4.25% by end-2026.

“We expect inflation to average 2.5% in 2026, staying within BSP’s target range. We forecast a slight weakening in the peso against the greenback from average of P58.00/USD in 2025 to P58.50/USD in 2026, which should help insulate the economy from import-induced inflation,” it said.

“Even though potential electricity rate adjustments and higher rice tariffs may exert inflationary pressures, we believe weaker growth momentum will contain overall upward pressure on prices.”

BMI projects the Philippine economy to grow by 5.2% in 2026, below the government’s 6-7% target.

“This suggests a greater need for the central bank to cut rates to further stimulate the economy. And it will have the policy space to ease further, as our Americas team forecasts that the Fed will lower the Fed fund rates by a cumulative 50 bps in 2026,” it said.

BMI said a further escalation in the global tariff war could have a bigger impact on consumer and investment sentiment, which could result in a larger drop in output.

“If such a scenario materializes with inflation expectations remaining largely anchored, the BSP would prioritize the economy and implement larger policy rate cuts,” it added. — K.K.Chan

The Philippine economy now sits at a “sweet spot” as inflation remains benign while the country’s banking sector and external position are strong, the Bangko Sentral ng Pilipinas (BSP) said.

“Amid the swirling controversies over corruption, I am pleased to report a piece of good news. We think the economy is in good shape,” BSP Governor Eli M. Remolona, Jr. said during a briefing at the Senate on Monday.

“Indeed, our economy is in what I would call a ‘sweet spot,’ and I think this would help our fiscal strategy (to) make it more effective,” he added.

For the first half, gross domestic product (GDP) growth averaged 5.4%, slower than the 6.2% a year ago.

Inflation averaged 1.7% in the January-July period, below the BSP’s 2-4% annual target.

Mr. Remolona said the central bank tamed inflation with its aggressive rate hikes.

Last week, it cut its key policy rate by 25 basis points (bps) to 5%. The central bank has so far lowered borrowing costs by a total of 150 bps since it began its easing cycle in August 2024.

“This lowering of the policy rate stimulates demand, it helps the economy grow, and because we did it in a very measured approach, it hasn’t led to inflation,” Mr. Remolona said.

He said inflation looks like it will stay within BSP’s 2-4% target range.

The BSP projected inflation to average 1.7% this year, before picking up to 3.3% in 2026 and 3.4% in 2027.

At the same time, Mr. Remolona also attributed the economy’s current state to the “sound” performance of the local banking system.

“The banks have solid balance sheets, assets are growing, deposits are growing, (and) income of banks is growing,” he said.

Mr. Remolona added that banks have maintained enough capital and liquidity.

“Looking at liquidity standards, international liquidity standards, our banks also hold liquidity that far exceeds the international standard,” he said. “At the same time, the loans are not so risky.”

Mr. Remolona also said digitalization and financial inclusion can help increase consumers’ savings, especially in a country where “savings rate tends to be quite low.”

Meanwhile, the BSP chief said the country has “more than enough” international reserves.

At end-July, the country’s gross international reserves slipped to $105.4 billion from $106 billion in June. — K.K.Chan