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Philippine President Ferdinand R. Marcos, Jr. on Thursday pledged to ramp up government spending in the fourth quarter, as a corruption scandal contributed to weaker-than-expected growth in the third quarter.

“We have implemented many measures because public spending will now be increased to make sure that by the end of the year, the spending levels are aligned with our original plan — so we can recover what was lost in the third quarter,” Mr. Marcos said in mixed English and Filipino during a press briefing in Malacañang.

The Department of Budget and Management (DBM) earlier said it has programmed PHP 1.31 trillion for disbursement during the October-to-December period to boost economic growth.

In the third quarter, the Philippine gross domestic product (GDP) growth slowed to a four-year low of 4% from the 5.5% expansion in the second quarter and 5.2% a year ago.

The sharp economic slowdown was mainly attributed to the corruption mess that dampened government spending and affected consumer and investor confidence.

For the first nine months of the year, GDP growth averaged 5%, slower than 5.9% in the same period last year, and below the government’s 5.5-6.5% full-year target.

The government is probing a multibillion-peso corruption scandal involving public works projects, where government officials allegedly colluded with private contractors to inflate costs and approve ghost infrastructure. It has affected investor confidence in the Philippines, weighing on the stock market and the Philippine peso.

Mr. Marcos vowed to put the culprits behind bars before Christmastime.

“They won’t have a Merry Christmas. Before Christmas, they will be jailed,” he said.

Mr. Marcos said the slowdown in economic activity in the third quarter can be partly blamed on the string of typhoons.

“There really was a downturn in economic activity. You have to remember that it’s not only because of these problems. Because of the typhoons, we lost working days in the economy,” he said.

Mr. Marcos also attributed the slower growth to the trade uncertainties, which are also affecting the global economy.

“We are not the only ones suffering the shocks that come from the new trade structure that has been imposed on the rest of the world. And so, we are all adjusting to that,” he added.

Since Aug. 7, the US has imposed a 19% duty on many goods from the Philippines, Cambodia, Malaysia, Thailand and Indonesia.

DBCC to review targets

Meanwhile, the Development Budget Coordination Committee (DBCC) is set to review its macroeconomic assumptions and targets next week, Senate Committee on Finance Chairman Sherwin T. Gatchalian said.

During the plenary debates for the 2026 national budget, Mr. Gatchalian said he is certain there will be revision in the growth targets.

“Next week the DBCC will once again meet and talk about this, possibly a revision in terms of our 2025 economic growth, and also the succeeding years 2025-2028,” Mr. Gatchalian said.

This was in response to Senator Risa N. Hontiveros-Baraquel’s question if the weak third-quarter growth will prompt a revision of the DBCC targets.

“We will also have a slightly lower economic growth forecast for the end of the year, about… 4.7-5%, Mr. President. And then our debt to GDP will still be at 63%,” Mr. Gatchalian said.

In June, the DBCC tempered its growth forecast to 5.5-6.5% for 2025 and 6-7% for 2026, mainly due to “heightened global uncertainties” arising from the Middle East conflict and US tariffs.

Mr. Gatchalian said there are a lot of factors that have affected the growth outlook, such as the series of typhoons and recent earthquakes.

Last week, Economy Secretary Arsenio M. Balisacan warned that hitting the low end of the 5.5-6.5% growth target would be “very challenging,” with more storms expected this quarter.

For next year, Mr. Gatchalian flagged external headwinds such as US trade policies that will have a negative impact on growth.

At the same time, Mr. Gatchalian said restoring public trust requires accountability, stressing that those involved in the flood control corruption scandal must face charges and be jailed before yearend.

“That’s why all of this flood control issue is giving us a lot of headache in terms of outgrowing debt. But still, that’s why the administration is really bent on holding people to account by putting them to jail, and that will bring back confidence and in turn revive our economic growth in the next quarter,” he said.

Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said the slowdown in economic growth is also due to the government’s lack of a “coherent” growth strategy.

“The main reason why our GDP growth is below target is that the current administration does not have a coherent growth strategy, and worse has allowed or enabled policies and activities that undermine growth (diversion of pub-lic funds to Maharlika, revenue-eroding measures, transfer of PDIC (Philippine Deposit Insurance Corp.) and PhilHealth (Philippine Health Insurance Corp.) funds to National Government, ‘most corrupt budget,’ massive corruption, etc,” he said in a Viber message. — Chloe Mari A. Hufana and Aubrey Rose A. Inosante

The Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) is seeking government support for the sector as it loses its competitiveness amid new US trade deals with Southeast Asian neighbors.

SEIPI President Danilo C. Lachica said the Philippines lost its edge when the US reciprocal tariff rates on other electronics exporter-countries were lowered.

“What you’re up against is the power cost, the logistics cost, the water cost, and the aggressiveness of the government,” he told BusinessWorld on the sidelines of the PASIAWORLD 2025 Annual Supply Chain Conference on Thursday.

“Our edge was the reciprocal tariff. But now, it’s a level playing field in terms of the tariff,” he added.

In August, the US began imposing a 19% tariff on most goods from the Philippines, Malaysia and Thailand, while a 20% tariff is charged on Vietnam.

Asked if the final agreements between the US and other members of the Association of Southeast Asian Nations (ASEAN) could further impact the competitiveness of the country, he said that it will remain “business as usual” until new rates are announced for the Philippines.

“Well, what we tell our (SEIPI) members for now is to take that as gospel truth. For now, that’s our reciprocal tariff. If that changes because of the US Supreme Court decision that challenges its legality, or Trump announces a new tariff, then we respond,” he said.

“You can’t afford to have analysis paralysis, and you will not do anything. So, just do your normal business,” he added.

For now, semiconductors and some electronics manufacturing services products are exempt from the reciprocal tariff.

“Am I secure with our 0% tariff for now? Yes, but I’m not going to hold my breath. Like I said, it just depends on how the wind blows in Washington, DC, but we’ll see,” he said.

“I think by the first or second quarter we should have some resolution there, and hopefully it’s favorable for the Philippines,” he added.

However, he said that there is a need for the Philippines to find new markets for its exports amid the US reciprocal tariff.

“We really need to look at new markets… whether it is ASEAN, African, or European. Especially in Europe, not many have heard of the capabilities of the Philippines,” he said.

“The interesting thing is, Latin American countries like Panama are inquiring, and Canada is also inquiring, so we really have to diversify our markets,” he added.

Mr. Lachica said that the Philippines must already establish its own wafer fabrication facility to remain competitive.

“If we don’t do this, we are probably just going to compete with Timor-Leste or Laos, while our more advanced neighbors are still going to grow their semiconductor and electronics industry,” he said.

Despite the challenges faced by the sector, he said recent trade numbers show the possibility that the exports of semiconductors and electronics will have modest growth.

“It’s becoming clearer that we will exceed flat growth. You would be pleasantly surprised. It is doing better than we expected,” he said. “What is driving it is artificial intelligence and the internet of things, so it is really advanced technology.”

In the first nine months, the country exported USD 33.52 billion worth of electronic products, up 9.5% from USD 30.6 billion a year prior.

Meanwhile, Mr. Lachica said that the corruption scandal has been sending a bad signal to multinational companies.

“As you know, multinationals don’t tolerate that kind of problem. If ever there’s anything uncovered, they fire the executive,” he said.

In particular, Mr. Lachica said some companies are seeking assurance from local partners on how they can be shielded from the effects of corruption.

“There is interest. Continuous? I hope. Significant? I hope. But there are also major concerns,” he added.

Mr. Lachica said businesses want to see the results of the Independent Commission for Infrastructure’s (ICI) probe on the alleged graft and corruption in government projects.

“The problem is, the ICI investigation has been going on for months, but no one is convicted. The credibility and sense of urgency, I don’t see it. I hope we get some conviction soon because it sends a bad message,” he said. — Justine Irish D. Tabile, Reporter

Large-scale shipbuilding in the Philippines has the potential to create 100,000 skilled jobs, Danish Ambassador to the Philippines Franz-Michael Skjold Mellbin said.

“We have this great shipbuilding initiative, which is aimed at bringing large-scale shipbuilding back to the Philippines,” Mr. Mellbin told reporters on the sidelines of a seminar on Wednesday.

“We’re very excited about that. We believe we can create maybe up to 100,000 jobs in the Philippines through shipbuilding. This is the most important initiative we have. And it will also bring new kinds of technology to the Philippines,” he added.

He said the Philippines remains an attractive destination for shipbuilding due to its skilled labor and geographical location, serving as an alternative to shipbuilding in China.

“We actually have several Danish companies that are here either to demonstrate their skills, to share their technology, or actually to cooperate with Filipino companies on building ships here in the Philippines,” he said.

“On the naval side, we have a shipbuilding company looking at the possibility of building ships together with our Filipino partners,” he added.

However, he said the country needs to take more steps to attract more investment.

“I think it’s absolutely essential that on the regulatory side, the government improves the opportunities for doing business here. But there’s a lot of work to do,” he said.

“There are many steps on the way… but what we are happy about is that the government agencies have come together,” he added.

He said corruption is a concern for Danish investors.

“Denmark is the least corrupt country in the world, and the first thing that investors ask me about is good governance and corruption. Unfortunately, there are challenges here in the Philippines, which are well known,” he said.

“I’m happy to see that the president and the government have said that they’re going to take specific steps to try to improve the situation. This is necessary. Good governance and anti-corruption measures would help improve doing business in the Philippines a lot,” he added.

Government agencies are banking on the passage of the Shipbuilding and Ship Repair (SBSR) Development bill to drive investment in the industry amid increasing interest from Europe.

“Yes, this is really very important. In fact, this is being stressed also by our President Ferdinand R. Marcos, Jr.,” Transportation Assistant Secretary for Maritime Villamor Ventura S. Plan said.

“Nakikita niya ’yung importansya ng maritime industry natin dito. Ang daming mga effects nito sa ating economy kasi (He sees the importance of the maritime industry, which will have substantial impact on the economy),” he added.

He said versions of the bill were filed at the House of Representatives. No similar bill has been filed with the Senate.

“We also have the commitments of several ambassadors from the European Union who will try to visit our legislators to push for this … (For our part) we will be submitting an endorsement letter also,” he added.

Anti-Red Tape Authority (ARTA) Secretary Ernesto V. Perez said the agency is strongly advocating for the passage of the SBSR bill.

“ARTA strongly advocates for the passage of the SBSR Development Act,” he said.

He said incentives will likely adhere to the framework of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, with investors also qualified for the Green Lane for Strategic Investments.

“Without the passage of this bill, we can still move forward because there are enough incentives … These are all in place for availment by our industries,” he added.

MARINA Administrator Sonia B. Malaluan said four versions of the bill were filed with the House of Representatives.

“I hope after all the flood control investigations and the budget hearings, the committee will start deliberating on bills filed,” she said.

“There should be a good, consolidated version once the committee starts work. We still need more awareness and information dissemination for people to recognize how shipbuilding in the Philippines is very important and es-sential to our economy and nation building,” she added. — Justine Irish D. Tabile, Reporter

The Bureau of Internal Revenue (BIR) may struggle to meet its PHP 3.219-trillion collection target this year as sluggish government spending weighed on overall tax receipts, a development its chief said may prompt a tweak of its full-year target.

“The overall performance is low… so there’s a need to recalibrate or recalculate the entire goal,” BIR Commissioner Romeo D. Lumagui, Jr. told BusinessWorld in an interview in mixed English and Filipino. “As things stand, it’s going to be quite difficult.”

“It’s really a challenge to meet the unadjusted goal.”

While the BIR has intensified tax collection efforts by tightening enforcement in sectors with compliance gaps like tobacco, Mr. Lumagui said the flood control scandal and the resulting slowdown in state spending have weighed on tax collections.

“Even government spending was put on hold,” he said, as authorities clamped down on public works spending amid allegations that politicians, officials and contractors were involved in a multibillion-peso kickback scheme involving substandard or nonexistent flood control structures.

“There was a slowdown in government expenditures, and that’s why remittances from the Department of Public Works and Highways and other government agencies also declined,” he added.

The latest Treasury data showed that BIR collections jumped by 10.88% to PHP 2.32 trillion in the first nine months of the year. However, this was 2.63% lower than the programmed P2.38 trillion for the January-to-September period.

The BIR, the main revenue collection agency, needs to collect around PHP 897 billion to reach the PHP 3.219-trillion full-year program. 

“We’re pressured to meet our targets,” he told lawmakers at a House hearing. “It’s critical to meet our collection target for the budget, so that we will not borrow and we are able to support the fiscal program of the government.”

Mr. Lumagui said there are discussions to reduce the BIR’s collection target for the year.

“I’ve already written about that, but it’s up to them to decide what adjustments will ultimately be made,” he said in Filipino. “They’re still assessing the actual effects of what’s happening and the overall economic performance.”

Philippine gross domestic product grew by 4% in the third quarter, sharply slowing from the 5.5% in the second quarter and 5.2% a year ago, amid a corruption scandal involving infrastructure projects that has dampened sentiment.

The BIR’s failure to meet its collection target could compel the government to cut public spending — possibly dampening economic momentum at a time when stimulus is needed for recovery — or push it to increase borrowing that could strain fiscal stability, said John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies.

“The shortfall also underscores how governance issues like the flood control scandal can ripple through the economy,” he said in a Viber message. “When public spending stalls, tax revenues from contractors, suppliers and consumption also fall.”

In a Viber message, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said lower collections could reduce the government’s fiscal space on other priority spending items.

Lawmakers should look at coming up with measures that could boost tax collections to bolster government revenues, he added.

Excise tax collections

Meanwhile, Mr. Lumagui said the BIR has collected PHP 250.99 billion in excise taxes in the first nine months, 1.06% lower than its PHP 253.68-billion goal for the period.

“We have seen an improvement in our collections in excise tax, both in vape products as well as tobacco products,” Mr. Lumagui said. “This is… a result of our aggressive enforcement activities in connection with excisable articles.”

Tobacco has long posed a challenge for the government as hundreds of millions of pesos in potential excise tax revenue are lost annually due to rampant smuggling and misdeclaration.

Mr. Lumagui said the BIR had collected about PHP 106 billion in excise tax from cigarettes in the first nine months of the year from PHP 84 billion a year ago.

“That is the same for vape products,” he added, noting that excise tax collections from electronic cigarettes jumped to PHP 2.055 billion from PHP 449 million in the same period last year.

“We’ve seen drastic improvements on these as a result of our nationwide enforcement, both on vape products and tobacco cigarettes,” said Mr. Lumagui, as authorities visited thousands of establishments selling tobacco products to check for compliance.

He said about 377 shops were found violating excise tax regulations, with 742,000 packs of illicit cigarettes and 267,508 milliliters of untaxed liquid products amounting to an estimated PHP 122.8 million of unpaid excise tax, having been seized from January to September this year.

At the same time, the BIR collected PHP 1.19 trillion from taxes on net income and profit in the January-to-September period, just 0.75% short of the PHP 1.2-trillion goal for the period.

The BIR collected PHP 507.88 billion from value-added tax as of end-September, 2.16% lower than its PHP 519.08-billion program for the nine-month period. — Kenneth Christiane L. Basilio, Reporter

The Bangko Sentral ng Pilipinas (BSP) will implement a payment system that works around the clock starting in 2026 as part of efforts to expand real-time and cross-border transactions, a top official said.

BSP Deputy Governor Mamerto E. Tangonan told BusinessWorld that the central bank is planning to expand the Philippine Payment and Settlement System (PhilPaSS) Plus operations to run for 24 hours, seven days a week.

“Implementation will start next year,” he said in a Viber message.

This came after BSP Senior Assistant Governor Edna C. Villa urged multiple banks, quasi-banks, nonbank electronic money issuers, financial market infrastructures and clearing switch operators to help the central bank design a 24/7 real-time gross settlement (RTGS) system.

In a separate statement on Tuesday, the BSP said the new system will help facilitate faster and more real-time transactions as well as connect the country’s payment system with its foreign counterparts.

“A round-the-clock operation will enable the payment system to settle more transactions in real-time, interlink with foreign payment systems, and further economic activities,” it said. “These may include 24/7 remittances, cross-border e-commerce flows, and bond trading.”

It noted that a 24/7 operating system would allow local online sellers to receive payments from international customers even during late-night hours.

The cash leg in bond trading may also be settled on the same day rather than the following business day, the BSP added.

Currently, the PhilPaSS Plus, which is owned and operated by the central bank, is only accessible from 9 a.m. to 5:45 p.m. during weekdays.

“The system is 24/7 ready,” Mr. Tangonan said. “But operating hours will be extended.”

An RTGS system facilitates the instant settlement of payments, transfer instructions, or other obligations individually on a transaction-by-transaction basis.

By settling retail payment clearing results, PhilPaSS Plus ensures that people, businesses and the government can send and receive money through several channels including checks, automated teller machines, InstaPay and PESONet, the central bank said.

In an event held in late October, BSP Governor Eli M. Remolona, Jr. said digital payment systems drive economic efficiency, financial inclusion and systemic resilience.

“Digital payments connectivity is not merely a technological advancement but a strategic enabler of economic efficiency, financial inclusion, and systemic resilience,” he said. “It lays the foundation for deeper trade, investment, financial and capital market integration across economies.”

Meanwhile, Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., said making payment systems accessible during late hours may boost consumer spending.

“Having accessible payment systems even during nighttime can allow for better convenience for consumers, encourage higher spending, all of which can help the economy,” he said in a Viber message.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said this would also support micro, small and medium enterprises, e-commerce, and digital workers, who benefit from faster turnover of funds.

“It also strengthens the digital economy by reducing reliance on cash and extending access to financial services for unbanked or underbanked Filipinos, especially in remote areas where traditional banking hours are (limited),” he said in a Viber message.

However, Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., noted that a round-the-clock operation could expose the country’s payment system to more cybersecurity threats. 

“The challenge is cybersecurity; more uptime means more exposure,” he said in a Viber message. “The key is strong security and real-time monitoring, so we get speed without sacrificing safety.”

The BSP added that PhilPaSS Plus’ operations will likewise be enhanced through automated debiting in the intraday settlement facility to provide peso RTGS participants with liquidity for payments, as well as new liquidity saving mechanisms to improve overall settlement efficiency.

As of the third quarter, the total value of PhilPaSS Plus transactions hit PHP 151.253 trillion, up nearly 21% from the PHP 125.05 trillion recorded during the same period last year, the latest BSP data showed. — Katherine K. Chan