Philippines: An Overview
Overview of the Political, Economic and Legal Landscape in the Philippines
Political landscape
In 2025, President Ferdinand R. Marcos Jr’s administration continues to prioritise structural reforms through the Common Legislative Agenda of the Legislative-Executive Development Advisory Council. The focus remains on infrastructure acceleration, energy security, fiscal and tax reforms, and digital transformation to sustain growth and strengthen governance.
Although the ongoing senate investigation into alleged anomalies in the country’s flood control projects has affected the sales of some foreign construction firms operating in the Philippines, the overall business environment remains resilient. Investor confidence has been bolstered by the creation of the Independent Commission for Infrastructure under Executive Order No 94, issued on 11 September 2025, which is tasked with investigating corruption in flood control projects over the past decade and ensuring accountability in government infrastructure spending.
Recent legislative reforms reflect the government’s drive to modernise and liberalise the economy. Republic Act (RA) No 12252, or the Investors’ Lease Act, extends foreign lease terms to 99 years to foster a stable long-term investment climate, while RA No 12289, or the Accelerated and Reformed Right-of-Way Act, streamlines right-of-way acquisition for infrastructure projects and ensures fair compensation for landowners. RA No 12254, or the E-Governance Act, institutionalises digital governance across all branches and levels of government to enhance transparency, efficiency, and service delivery, and RA No 12234, or the Konektadong Pinoy Act, also known as the Open Access in Data Transmission Act, opens the data transmission sector by removing franchise requirements for new entrants. Notably, RA No 12214, or the Capital Markets Efficiency Promotion Act (CMEPA), effective 1 July 2025, simplifies passive income taxation with a uniform 20% withholding tax, lowers the stock transaction tax from 0.6% to 0.1%, and rationalises documentary stamp taxes.
Together with earlier measures such as RA No 11967, or the Internet Transactions Act of 2023, RA No 12023, or the VAT on Digital Services Law of 2024, and RA No 11534, or the CREATE MORE Act of 2024, these laws reinforce the government’s push for a more transparent, efficient and competitive investment environment.
Economic performance
The Philippine economy remains resilient despite global and domestic headwinds. For 2025, the Development Budget Coordination Committee targets gross domestic product growth at 5.5% to 6.5%, slightly trimmed from earlier projections. The World Bank forecasts 5.3% growth, while the Asian Development Bank views the Philippines as a “bright spot” in Southeast Asia due to domestic demand and strong public investment. To maintain competitiveness, the government is pursuing new free trade agreements with the EU and UAE, aiming to expand market access for services such as IT-business process management, finance and engineering.
Sustainability has become a key driver of economic growth, with the Securities and Exchange Commission (SEC) introducing the Philippine Green Equity Guidelines in 2025 to attract sustainable investments. Under SEC Memorandum Circular No 13, companies seeking to use the Philippine Green Equity label must be listed on the Philippine Stock Exchange or preparing to go public. To qualify, more than 50% of their revenues and investments must come from green activities aligned with the Philippine Sustainable Finance Taxonomy Guidelines or the ASEAN Taxonomy for Sustainable Finance, while revenues from fossil fuels must be capped at less than 5%.
Geopolitical and security concerns
Tensions in the West Philippine Sea (WPS) remain high. In September 2025, a Philippine Coast Guard vessel sustained damage and a crew member was injured after two China Coast Guard ships fired water cannons at it near Bajo de Masinloc (Panatag Shoal). President Marcos reiterated that the Philippines will continue asserting its sovereign rights. He emphasised that the Philippines will strive to conclude a legally binding Code of Conduct for the WPS when it chairs the Association of Southeast Asian Nations Summit in 2026.
The government has intensified efforts to protect food security and maritime development through programmes such as Kadiwa Para sa Bagong Bayaning Mangingisda (KBBM), directly supporting fisherfolk in contested waters.
The government has also continued to strengthen alliances with other nations in securing support for the WPS. In April 2025, Australia donated surveillance drones to the Philippine Coast Guard to boost maritime domain awareness. The donation formed part of a broader co-operation package that also includes vessel remediation, postgraduate scholarships, operational training, marine protection programmes, and maritime law seminars. As part of this commitment, the Australian government pledged to double its civil-maritime co-operation investment with the Philippines to about USD11.5 million from 2025 to 2029.
In September 2025, the US committed USD55 million in maritime law enforcement funding for the Philippines and other Indo-Pacific allies. The Philippines, the US, and Japan carried out another round of joint maritime drills in the WPS in September 2025, reaffirming their defence co-operation amid escalating tensions over China’s growing assertiveness in contested waters. Likewise, in August 2025, the Philippines and India agreed to expand joint maritime exercises to further enhance security and co-operation in the WPS and across the wider Indo-Pacific region.
The ongoing maritime dispute in the WPS could disrupt trade and supply chains in the Philippines, restrict access to vital resources like energy and food, exacerbate environmental degradation, increase crime in international waters, limit freedom of navigation, and undermine national sovereignty. The government is focused on developing its energy and technology sectors to reduce dependence on China in terms of trade and investment linkages.
Technology and artificial intelligence
Digitalisation and artificial intelligence (AI) are central to the Philippines’ development strategy. In 2025, President Marcos encouraged Filipinos to adopt AI tools, including the TunAI fact-checking app, to combat disinformation and enhance digital literacy. The Department of Information and Communications Technology is also developing a national AI engine capable of multilingual responses, crime reporting, and educational support.
These initiatives build on the Digital Workforce Competitiveness Act and the forthcoming National AI Strategy 2.0, ensuring that the Philippine workforce remains competitive in the face of automation.
Energy and sustainability
The expected depletion of the Malampaya natural gas fields underscores the urgency of diversifying the Philippines’ energy mix. To address this, the government has set targets of achieving a 35% renewable energy (RE) share by 2030 and 50% by 2050, with a strong push for offshore wind, geothermal, energy efficiency measures, and other green energy options.
Key policy reforms include allowing 100% foreign ownership of RE projects to attract greater investment, expanding RE portfolio standards, net metering, energy storage programmes, and advancing nuclear co-operation. Notably, the US–Philippines 123 Agreement on civil nuclear collaboration, signed in 2023 and effective from 2024, provides a framework for nuclear energy development.
Complementing this, the recent passing of RA 12305, or the Philippine National Nuclear Energy Safety Act, established the Philippine Atomic Energy Regulatory Authority to oversee the safe and peaceful use of nuclear power.
Conclusion
The Philippines in 2025 is at a critical juncture. Economic fundamentals remain stable, but risks from geopolitical threats, maritime disputes, and other external factors persist. The Marcos Jr administration is leveraging reforms in digitalisation, infrastructure, investment liberalisation, and sustainability to position the country for long-term growth. With continued policy execution, the Philippines is projected to reach upper-middle-income status by 2027 and sustain its trajectory toward becoming one of the world’s top 20 economies by 2050.