Gov’t reforms to yield ‘modest results’ without overhauling governance

THE government’s proposed “big, bold reforms” will probably yield only modest results if governance issues that enable corruption are not addressed, a former central banker said.

GlobalSource Principal Advisor Diwa C. Guinigundo, a former Bangko Sentral ng Pilipinas (BSP) deputy governor said the public institutions tasked with implementing the reforms are themselves in need of reform.

“I think all of this can move the needle but just a little bit,” Mr. Guinigundo told Money Talks with Cathy Yang on One News on Monday. “The problem is governance, it is about corruption. And that is behind the drop in FDI (foreign direct investment) as well as domestic investment.”

In October, FDI net inflows plunged by 39.8% to $642 million.

Mr. Guinigundo noted that structural corruption and the culture of impunity are bigger issues than the ease of doing business.

“The issue is not just ease of doing business, ensuring that policies are in place to avoid corruption,” he said. “Because who will implement those game-changing and needle-moving initiatives unless the issue of corruption is addressed head-on and the culture of impunity is also addressed by the Ombudsman and the civil courts.”

On Friday, economic managers presented their “big, bold reforms” to the private sector, which entailed four major plans to restore waning investor confidence.

Among the proposed reforms are the restoration of the P4.32 billion in funding for the Comprehensive Automotive Resurgence Strategy (CARS) program, which had been vetoed from the budget. Incentives are designed to support fixed investment and reward car manufacturers that produce in volume, and 14-day visa-free entry for Chinese businessmen and tourists.

The government is also seeking to establish a digitized audit system for the Bureau of Internal Revenue (BIR) and reduce the frequency of issuing Letters of Authority, as well as to roll out a national single-window trade facilitation platform for the Bureau of Customs to minimize red tape.

Various government agencies have come in for added scrutiny since the exposure of flood control scams in July. The BIR has also come under a cloud because of the alleged use of tax audits for extortion.

Growth sank to an over four-year low of 4% in the third quarter of 2025 due to the resulting damage to investor confidence and the slowdown in government spending after projects had to come in for extra review.

Meanwhile, the German-Philippine Chamber of Commerce and Industry, Inc. (GPCCII) called for consistent implementation and tangible results in the rollout of the government’s pledged reforms.

In a statement late Sunday, GPCCII President Marie Antoniette E. Mariano said governance challenges and sustained execution are crucial in translating these reforms into lasting confidence and inclusive growth.

“What investors and businesses will closely watch is consistent implementation, transparency, and measurable impact — particularly in improving ease of doing business, regulatory clarity, and overall economic performance,” she said.

Mr. Guinigundo said that the government can only regain investor trust if it ensures fair administration of justice and observes the rule of law, end impunity, and introduce real accountability for all public officials, while ensuring that fiscal policy remains solid.

“In short, restoring investor confidence requires more than aspirational reform rhetoric,” Mr. Guinigundo said in a separate commentary. “It demands measurable progress in governance, accountability, and fiscal responsibility. Without these, efforts to streamline regulations and promote investments will remain cosmetic — and business sentiment will continue to slump despite official assurances.” — Katherine K. Chan