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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

Net inflows of foreign direct investments (FDI) into the Philippines slumped by 40.5% in August, amid a drop in net investments in debt instruments, the Bangko Sentral ng Pilipinas (BSP) reported on Monday.

Preliminary central bank data showed that net inflows declined by 40.5% year on year to USD 494 million from USD 830 million in the same month in 2024.

This was the lowest amount in two months or since the USD 376 million recorded in June. 

Month on month, FDIs plunged by 61% from USD 1.268 billion in July.

“Net foreign direct investments into the Philippines remained positive in August 2025, with inflows from Japan and into manufacturing taking the lead,” the BSP said in a statement on Monday.

Net investments in debt instruments slumped by 73.8% to USD 145 million in August from USD 553 million a year ago.

These consisted mainly of intercompany borrowing or lending between foreign direct investors and their subsidiaries or affiliates in the Philippines, according to the central bank.

Meanwhile, investments in equity and investment fund shares rose by 26.1% to USD 349 million in August from USD 276 million in the same month last year.

Nonresidents’ net investments in equity capital, excluding reinvestment of earnings, more than doubled to USD 146 million from USD 66 million last year.

Equity placements grew by 53.2% to USD 158 million from USD 103 million a year ago, while withdrawals declined by 66.2% to USD 13 million from USD 37 million a year earlier.

Reinvestment of earnings also slipped by 3.6% to USD 203 million in August from USD 210 million a year ago.

Union Bank of the Philippines (UnionBank) Chief Economist Ruben Carlo O. Asuncion said in a Viber message the lower FDI inflows reflect the impact of external headwinds and domestic investor sentiment.

“The sharp decline in nonresidents’ net investments in debt instruments… was the main drag, suggesting reduced intercompany lending and financing activity amid cautious global conditions,” he added.

Mr. Asuncion said the main factors that contributed to the August slowdown include softening global trade, high US tariffs, geopolitical uncertainty, and tighter global financial conditions.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the US tariffs and other protectionist policies as well as the flood control controversy may have weighed on investor sentiment.

“The series of typhoons from July (to) August could have also weighed on many local economic data, including FDIs, in view of reduced business days caused by these weather-related disruptions on the local economy,” he added in a Viber message.

Eight-month FDI down

In the first eight months of the year, FDI net inflows declined by 22.5% to USD 5.179 billion from USD 6.686 billion in the same period in 2024.

This came as investments in equity and investment fund shares fell by 18.7% to USD 1.786 billion from USD 2.195 billion a year earlier.

Net foreign investments in equity capital other than the reinvestment of earnings likewise dropped by 35.5% to USD 870 million from USD 1.349 billion a year ago.

Placements went down 20.1% to USD 1.364 billion, while withdrawals climbed by 37.6% to USD 494 million.

Nonresidents’ net investments in debt instruments declined by 24.4% to USD 3.393 billion in the eight-month period from USD 4.49 billion the previous year.

“For the first eight months of 2025, equity capital placements were sourced primarily from Japan, the United States, Singapore, and South Korea,” the central bank said.

Most foreign investments went into manufacturing, wholesale and retail trade, and real estate, it added.

“Domestically, while equity placements from Japan, the US, Singapore, and South Korea remained positive — particularly in manufacturing, retail, and real estate — the overall investment climate still faces challenges related to policy clarity, logistical bottlenecks, and execution gaps,” Mr. Asuncion said.

He said FDI net inflows are likely to pick up in the last quarter of the year.

“While this is below trend, we believe the BSP’s USD 7.5-billion full-year target remains achievable, albeit with downside risks,” he said. “The recent uptick in equity placements and reinvested earnings in July and August is encouraging, and we expect some recovery in (the fourth quarter) as sentiment stabilizes and seasonal investment flows pick up.”

Mr. Ricafort also noted that further easing by the central bank could help attract more FDIs into the country.

“Further rate cuts by the Fed and the BSP in the coming months would also make borrowing costs cheaper from the point of view of foreign investors, would helping increase demand for loans to finance more FDIs into the country, both new and expansion projects,” he said.

Since it began its easing cycle in August last year, the central bank has reduced its benchmark policy rate by 175 basis points to a three-year low of 4.75%.

BSP Governor Eli M. Remolona, Jr. earlier said they could deliver another cut later this year and into 2026. The Monetary Board’s last rate-setting meeting this year is on Dec. 11. — Katherine K. Chan

The Philippine economy is expected to accelerate in the fourth quarter, driven by holiday spending, exports, and a rebound in investment activity, Budget Secretary Amenah F. Pangandaman said, but flagged risks from natural disasters.

However, some analysts are skeptical of a fourth-quarter boost as state spending and household consumption are dampened by the corruption scandal.

Ms. Pangandaman, who also chairs the Development Budget Coordination Committee, said the government sees gross domestic product (GDP) growth picking up in the final stretch of 2025.

“(This will be) driven by private holiday spending and supported by government programs, as well as growth in exports and capital outlays,” she told BusinessWorld in a Viber message on Monday.

The economy slowed to 4% in the third quarter from the 5.5% expansion in the second quarter and 5.2% a year ago. This came as the corruption scandal stalled public construction and dampened consumer and investor sentiment.

For the first nine months of the year, GDP growth averaged 5%, slower than 5.9% in the same period last year.

Ms. Pangandaman said she anticipates a rebound in gross capital formation, the investment component of the economy, in the fourth quarter, after it contracted by 2.8% in the third quarter.

“Private investments would be supported by favorable market conditions given lower interest rates, greater liquidity and availability of credit, and seasonal increases in demand for goods and services during the holidays,” the Department of Budget and Management (DBM) chief said.

Since August 2024, the Bangko Sentral ng Pilipinas has reduced its benchmark rate by 175 basis points (bps), bringing it to a three-year low of 4.75%.

At the same time, Fitch Solutions’ BMI said fourth-quarter growth may be driven by remittances and recovery from the recent spate of typhoons.

“We expect the recovery from storm season and strong remittances to drive faster growth in Q4, although tariff-related headwinds will drag on growth,” it said on Monday.

BMI also expects household consumption to pick up in the October-to-December period thanks to stronger remittances driven by a weaker peso and the frontloading of transfers ahead of the US 1% remittance tax starting January 2026.

The US will start imposing on Jan. 1, 2026 a 1% excise tax on cash-based remittances from US senders to recipients abroad.

However, BMI said this boost in remittances is expected to be temporary and will likely lead to a slowdown in 2026.

“Academic research has found that [for] every 1% increase in the cost of sending remittances, the amount remitted falls by around 1.6%. Remittances, therefore, are likely to drag on consumption growth into 2026, diminishing the positive effects of easier monetary policy,” it said.

BMI lowered its GDP growth forecast to 4.9% for 2025, but kept its 5.2% projection in 2026.

“The risks to our forecasts are tilted to the downside. The drag on government spending from the corruption probe could last beyond Q1 2026, particularly if sectors other than flood control are implicated,” it said, adding that slow remittance growth and tariff uncertainty will also remain key headwinds in 2026.

Meanwhile, Nomura Global Markets Research said it expects Philippine GDP growth to slide below 4% in the fourth quarter, citing “still-weak sequential momentum.”

“We believe the drag from the graft scandal in Q3 is just the start, with fiscal spending likely to worsen in the next three to four months. In addition, we continue to incorporate some spillovers on other components of domestic demand… broadening from household consumption to private investment spending,” Nomura said in a report on Monday.

“Our forecasts also continue to take into account the impact of the US tariffs, which pose significant headwinds to goods exports.”

Economy Secretary Arsenio M. Balisacan earlier said the economy must grow by at least 6.9% to hit the low end of the government’s 5.5%-6.5% full-year goal.

Nomura kept its full-year growth forecast at 4.7%, down from last year’s 5.7% and below the government’s target range. If realized, this would mark the slowest pace since the pandemic and trail regional peers like Indonesia.

For his part, IBON Foundation Executive Director Jose Enrique “Sonny” A. Africa said there’s “little reason” to expect the economy to grow by nearly 7% in the fourth quarter, citing weak consumption, exports, and restrained public spending.

“There are no possible sources of any spending spurges — since 2023, household consumption has been weakening since the waning of the post-long lockdown rebound and likewise with exports because of high global uncertainty,” he told BusinessWorld in a Viber message.

“Government infrastructure spending is also unlikely to spike in the last quarter as officials avoid creating further paper trails from corruption-ridden and -vulnerable projects,” he added.

Mr. Africa said the government should stop obsessing with GDP growth targets and instead give “genuine attention to the quality of growth and whether this creates decent employment, raises wages, reduces poverty, reflects improving food security, and improves ecological resilience.” — Aubrey Rose A. Inosante, Reporter