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Andrea Taguines

ABS-CBN News

MANILA -- The World Bank on Tuesday urged the Philippines to double down on domestic reforms that would reduce trade and investment costs, amid the threat of higher U.S. import tariffs.This comes after US President Donald Trump hiked the planned tariff on Philippine goods to 20 percent from the 17 percent previously announced in April. The Marcos administration is still trying to negotiate with Washington ahead of the August 1 deadline.While these are external “shocks” that the Philippines does not have control over, World Bank Lead Economist Gonzalo Varela pointed out that there are crucial steps it can take in the home front “to compensate for barriers that you may face in international markets.”<div><a class="fr-green fr-strong" href="https://www.abs-cbn.com/news/business/2025/7/14/trump-tariffs-to-affect-ph-snacks-fruits-juice-exports-may-lead-to-layoffs-philfoodex-1301">READ: Trump tariffs to affect PH snacks, fruits, juice exports</a></div>As an example, Varela said streamlining regulations on domestic shipping can lower transport costs and, as a result, ease the burden on traders.“In an archipelagic economy like the Philippines, there are restrictions to which type of players can come in and operate domestic shipping lines. That restriction increases trade costs and is something within the control of the policymakers,” he noted.He added that there are still lots to improve on in terms of ease of doing business.“It takes 106 days for foreign companies to set up shop in the Philippines compared to 15 (days) in Singapore. That adds to investment costs. That is not imposed by others— that is a policy decision that can be made in the Philippines, to simplify that process,” said Varela.Other key elements to ponder, according to Varela, are how much of Philippine exports go to the US, and whether competitors in the same market are getting hit with the same, lower or higher import restriction.“If others are actually facing higher tariff then what happens is that the Philippines would be, in that hypothetical case, gain a margin of preference in the market,” he said.He also urged government to fast-track the passage and implementation of laws such as the Public Service Act, the opening up of the renewable energy sector to full foreign ownership, as well as the Konektadong Pinoy bill, to boost competition.According to Varela, the realization of these bold and strategic reforms could also help propel the Philippines to achieve closer to a 7-percent growth trajectory, transforming it into a middle-class society by 2040.In the World Bank’s newly-released country growth and jobs report, Running Uphill: Growth, Jobs, and the Quest for Productivity, it noted that a new playbook focused on creating more and better-paying jobs is increasingly urgent as the Philippines confronts a new global context.This context is characterized by global uncertainty; rapidly evolving technologies with significant implications for jobs, such as artificial intelligence; and recurrent climate shocks.But according to the report, limited competition in key sectors constrains the growth and job creation of top-tier firms.“The 20 percent most proactive firms in the Philippines reduced their share of employment... These large firms tend to be in sectors that are less exposed to competition, no tradeables. A key challenge there is how much competition there is. How [much] incentives do firms that are at the top have to be dynamic, to innovate, and to grow?&quot; Varela asked.&quot;So reforms that can increase competition should create some incentives for firms in the country to innovate,” he said.

The World Bank urged the Philippines to double down on domestic reforms that would reduce trade and investment costs, amid the threat of higher U.S. import tariffs.

The World Bank urged the Philippines to double down on domestic reforms that would reduce trade and investment costs, amid the threat of higher U.S. import tariffs.

What to do in face of higher US import tariffs? World Bank tells PH to double down on domestic reforms

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What to do in face of higher US import tariffs? World Bank tells PH to double down on domestic reforms

Andrea Taguines,

ABS-CBN News

Published Jul 15, 2025 05:06 PM PHT

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