In our “In Brief” for New York-based GlobalSource Partners last Monday, and in my interview with Cathy Yang on Money Talks that same day, we addressed a simple but consequential question: Are the Marcos Jr. administration’s responses to deteriorating business sentiment truly game-changing, or do they merely move the needle?
The decline in sentiment among business and civil society is not cyclical noise. It reflects a hard judgment: the state has failed to curb corruption and enforce good governance. Without restoring integrity in public institutions, public resources will continue to be siphoned away from infrastructure, innovation, sound economic planning, public health, and education. Without good governance, there can be no durable growth.
Against this backdrop, government officials announced a slate of “big, bold reforms.” The issue is not whether these reforms are well intentioned. The issue is whether they represent a break from the past — or simply another iteration of familiar promises.
Several agencies outlined commitments. Tourism, Agriculture, and Agrarian Reform pledged modernization initiatives. The Department of Trade and Industry, Board of Investments, and Department of Information and Communications Technology committed to attracting high-impact investments and accelerating digital transformation. Regulatory agencies — the Securities and Exchange Commission, Food and Drug Administration, the Philippine Competition Commission, and the Department of Environment and Natural Resources — promised to streamline procedures and reduce bottlenecks.
We readily acknowledge that engagement with the private sector is necessary. Signaling reform intent and addressing the high cost of doing business, much of it driven by regulatory inefficiency, are overdue. Streamlining processes and cutting red tape are welcome steps. They should, however, have been done on day one of every administration over the past two decades. We are now into the last two and a half years of President Ferdinand Marcos, Jr.’s term.
Yet these initiatives are not sufficient. They miss the core of the problem.
As one broadsheet captured succinctly: “Corruption puts investors on edge.” The deeper issue can be summarized as TEA: weak transparency, selective enforcement and execution, and uncertain accountability. These deficits corrode trust far more severely than administrative delays. When corruption is systemic, public funds are diverted away from research and development, innovation, and productivity-enhancing infrastructure. The consequence is slower growth, weaker efficiency, and fading regional relevance.
Specific examples underscore the point. How does restoring P4.32 billion to the CARS (Comprehensive Automotive Resurgence Strategy) Program reverse decades of manufacturing hollowing? How does visa-free entry for Chinese nationals boost tourism and investment when signage is inadequate, connectivity is weak, and destinations are poorly maintained? How does IMF-compliant debt reporting restrain a growing bias toward borrowing rather than fiscal consolidation? How does digitizing Bureau of Internal Revenue audits prevent abuse of Letters of Authority when discretion remains entrenched in enforcement? In each case, the reform is procedural; the problem is institutional.
A wry comparison in social media illustrates the gap between reform as rhetoric and reform as rupture:
• Vietnam: “We will reduce provinces from 63 to 34 and cut 30% of party commissions and ministries — making the state leaner and easier to coordinate.”
• Philippines: “We will eliminate visas for Chinese tourists and create a National Single Window for Imports.”
Both are reforms. Only one fundamentally alters how power, accountability, and coordination operate.
This distinction helps explain why, despite respectable GDP growth, often ranking second only to Vietnam for 2025 and perhaps for 2026 as well, many Filipinos feel no corresponding improvement in their lives. Inflation may be contained, but absolute prices remain beyond household capacity. Jobs exist, but many are insecure and poorly paid. The economy appears stable, but it lacks the resilience to absorb future shocks.
The proposed reforms will not overturn a consumption-led growth model fueled by remittances and Business Process Outsourcing receipts. The Philippines has a weak industrial base, a fragmented, if not absent, industrial policy, limited processing of raw materials, feeble exports, Asia’s highest power costs, chronic port congestion, and unpredictable investment rules — problems flagged repeatedly by multilateral institutions, with little sustained follow-through.
Indonesia and Vietnam stand in sharp contrast. Private consumption accounts for less than 60% of GDP in both countries, compared with over 70% in the Philippines. Gross investment consistently exceeds 30% of GDP in Indonesia and Vietnam, versus roughly 23% in the Philippines. Indonesia anchors growth on resource-based manufacturing; Vietnam on export manufacturing. Investor trust reflects this reality: Tesla suppliers and Hyundai invest in Indonesia; Samsung, Apple, Intel, and Lego operate at scale in Vietnam. Their industrial zones, logistics, and incentives are coherent, predictable, and credible.
In short, the Philippines grows by spending more; Indonesia and Vietnam grow by making more.
This brings us to what game-changing reform actually looks like. For that, Canadian Prime Minister Mark Carney’s Davos speech is instructive.
Carney offered an unvarnished diagnosis: we are witnessing “the rupture of the world order” — the end of comforting narratives and the emergence of a brutal reality in which great-power geopolitics is no longer constrained. Territorial pressure over Greenland, regime-change intervention in Venezuela without a clear multilateral mandate, and the weaponization of tariffs against allies, including Canada, all signal that the old rules no longer hold.
The appropriate response, Carney argued, cannot be superficial. Middle powers must decide whether to retreat behind walls or act with ambition. His prescription was both principled and pragmatic: anchored on sovereignty, territorial integrity, the prohibition of force, and respect for human rights — while recognizing that interests diverge and progress is often incremental.
Crucially, Canada acted. It dismantled federal barriers to interprovincial trade. It fast-tracked nearly a trillion dollars in investment in energy, AI, critical minerals, and new trade corridors. It committed to doubling defense spending with domestic industrial linkages. It rapidly diversified trade partnerships and asserted sovereignty in Ukraine, the Arctic, and NATO — marking a decisive departure from automatic reliance on the United States. These were not slogans; they were structural breaks.
By contrast, the Philippine response remains tangential. The crisis is a collapse of public trust in the state’s capacity to enforce rules and punish wrongdoing. Yet the policy response centers on process streamlining and visa facilitation. What about the rule of law, or justice, or overhauling the election law, or banning political dynasties?
President Marcos’ “Mahiya naman kayo!”* moment in last year’s State of the Nation Address nearly crossed into game-changing territory. It named corruption at an unprecedented scale. But without sustained enforcement, institutional backing, and visible consequences, it remained rhetorical.
Which brings us back to “big, bold reforms.” Too many echo recommendations repeated for more than a decade by international financial institutions: better planning, improved budgeting, technical assistance, revenue mobilization. Necessary, yes — but not transformative.
Carney’s invocation of Václav Havel’s greengrocer is apt. Everyone displays the slogan — “Workers of the world, unite!” — even though no one believes it. The system endures not through coercion, but through participation in rituals known to be untrue. Havel called this living within a lie.
For policymakers, the implication is stark. Game-changing reform is not about announcing familiar fixes with louder adjectives. It is about visibly breaking with practices that hollow out the state: enforcing accountability without exception, dismantling rent-seeking structures, committing to an industrial strategy that survives political cycles, and building institutions that work even when personalities change.
Until reform shifts from ritual to rupture, from intent to enforcement, the Philippines will continue to grow on paper while falling behind in reality. And if we continue to post slogans we no longer believe, we should not be surprised when Indonesia and Vietnam pull decisively — and permanently — ahead.
*“For shame.”
Diwa C. Guinigundo is the former deputy governor for the Monetary and Economics Sector, the Bangko Sentral ng Pilipinas (BSP). He served the BSP for 41 years. In 2001-2003, he was alternate executive director at the International Monetary Fund in Washington, DC. He is the senior pastor of the Fullness of Christ International Ministries in Mandaluyong.