MANILA -- The Philippines got its first investment grade rating from Fitch Ratings and got another one from Standard & Poor's in less than two months time.
So what if the Philippines got two investment grade ratings?
Well, there's more capital flows going to the stock and bond markets boosting shares that already are at record highs; and bond rises too, in effect, lowering borrowing rates.
But with two debt watchers vouching for the country's capacity to pay, Philippine Dealing and Exchange Corp. (PDEx), the country's bond exchange agency, said the Philippines could attract the more conservative investors.
Reuters said that this means possible inclusion of Philippine government bonds in influential regional indices of JP Morgan, Barclays and Citigroup.
"The news coming out gives us the opportunity to be having ... more permanent allocation for investments in the Philippines [and] these are longer-dated investments," Vicente B. Castillo, chief executive officer at PDEx, told ANC.
But that's the hot money of capital flows. The more lasting, permanent inflows like foreign direct investments (FDI) may still be elusive without reforms--and it's the FDIs that make a deeper impact on the economy.
"You (the Philippines) really have to understand what an investor is looking for," John Forbes, senior adviser at the American Chamber of Commerce, pointed out.
However, Trade Secretary Gregory L. Domingo said the back-to-back investment-grade rating itself can attract FDIs though not this soon.
"Yung cycle ng investing sa stock market mas mabilis, it's a few weeks to a few months and that's why yung March announcement ng Fitch nakita niyo na, nareflect na," Domingo explained.
"Sa FDI, mas matagal ang decision cycle, it's about 6 to 18 months. So you'll see the impact of the Fitch announcement later this year, and S&P maybe later this year or next year," he continued.
To further convince foreign investors to come in, the government is targeting a 29-notch climb in the World Bank's Global Competitiveness Ranking next year.
The World Bank currently ranks the Philippines 138th among 185 economies it rated for this year and it is scheduled to release the 2014 rankings by October. The government wants to place 109th by then.
To reach that, National Competitiveness Council co-chairman Guillermo Luz said government would halve the 16 steps and 36 days it takes to start a business, cut the steps for obtaining construction permits from 29 to 12, and reduce the number of tax payments from 47 to 14.