Davao business leaders happy over investment grade status Lao, Lim explain impact, implications of Finch rating

By ANTONIO M. AJERO
DAVAO business leaders Vicente T. Lao and Daniel T. Lim said that the investment grade rating earned by the Philippines from Fitch last week is beneficial to the country and its people.
Lao, a prominent contractor and agribusiness capitalist, is the chairman of the Mindanao Business Council (MBC), while Lim,who heads his own architectural company, is the newly inducted president of the Davao City Chamber of Commerce and Industry, Inc.
Architect Lim said the “investment grade means a lot of things no wonder it is cause for euphoria to many people who understand economics.”
“Ratings firms like Fitch,  Standard and Poor, and Moody’s are world renowned companies that assess the capacity, capabilities, progress, or performance of an  economy or a company,” he said.“In globalized economies where profit seeking behavior rules, risk management comes at the spotlight. A ratings firm’s poor assessment can mean that extra premium one country has to pay for say being below investment grade. This system identifies whether a country’s macroeconomic policies or structures are sound enough to carry on economic and business growth, Lim said.
On the other hand, Lao said “this (investment grade status) is the best news in a long time.”
“Investment grade rating for a country will bring in cheaper cost of money for the public and private sector,” the MBC head said, adding that the status “will redound to a lot of savings for the government which can be diverted to provide more basic services.”
The upgrade means that the government of the Philippines could seek loans from foreign institutions at a lower cost (because of the premium reduction).this may lead to further pump priming of the economy since it capital to fund for the slated projects of the government will be cheaper. this may then lead to a more robust spending that may lead to faster multiplier effects in the economy..
Lao said that the upgrade “means cheaper loans which will encourage more investment into the country’s economy.”
Lim said that greatest hope one optimist can have is that this ratings upgrade will translate to more upbeat business sector. “Improvements in transport and logistics system, human capital, and telecommunications are most welcomed from the government to help push for a better and more competitive Philippine economy,” he added.
The business sector is in the wings, cautiously optimistic that the next move of the Aquino administration will lead to an economic landscape of better ease of doing business, the architect said.
Lao said the investment grade status of the country is also expected to also “generate more employment and other downstream industries.”
Lim said that private enterprises specifically the SMEs are those who need the support; they are the ones who employ the most number of people; and they will be the channels of inclusive growth.
“The Fitch investment grade is good news, yet much is to  be proven. It is a signal, not an end,” the DCCCII president cautioned.
Entrepreneurs will continue to do their best and enjoy the positive news, the ball is in the hands of the Aquino administration, he said. AMA