Country risk in the Philippines is low to moderate. The OCED gives the Philippines a country credit rating of 3, which indicates a relatively low to moderate likelihood that this country will be unable or unwilling to meet its external debt obligations in a systemic sense—though, needless to say, sub-sovereign entities and individual debtors can and do default. Despite the robust economic performance and sanguine outlook, the unstable political outlook combined with a relatively volatile business environment poses risks to investors.
The Philippines has an ease of doing business rank of 113 out of 190 economies. They outperform the emerging Asian average when it comes to resolving insolvencies and accessing electricity. But starting a business, getting credit, protecting minority investors and enforcing contracts is difficult.
There is low to moderate risk of expropriation in the Philippines. However, several mine closures in early 2017 due to changes in environmental regulations highlight contract alteration risks, particularly in the mining space.
Political risk is moderate. Political stability has long been hampered by political turmoil and ongoing security issues. In June 2016 when President Rodrigo Duterte assumed power, he clamped down on the illicit drug trade throughout the Philippines. This led to greater conflict as the crusades often resulted in violence. Not surprisingly, the Philippines ranks poorly on the World Bank’s measure of political stability and absence of violence. Most other governance scores are broadly in line with the emerging Asia average.