Recently, the Philippines successfully exited the Financial Action Task Force (FATF) "grey list," marking significant progress in its anti-money laundering (AML) and counter-terrorism financing (CTF) efforts. However, experts warn that sectors like online gambling and cryptocurrencies may still pose new money laundering risks, requiring the government to remain highly vigilant.
Choon Hong Chua, head of financial crime business for Moody's in Asia Pacific and the Middle East, stated that the Philippines' departure from the grey list reflects the government's commitment to strengthening financial regulation and helps boost investor confidence, promoting economic stability.
"The government has intensified inter-agency coordination and implemented a series of comprehensive reforms, which were crucial for successfully exiting the grey list. This progress is vital for the transparency of the financial system and international credibility," he said.
However, he also noted that money laundering risks are not completely eliminated. "The flow of funds in the online gambling and cryptocurrency industries exceeds the coverage of traditional financial regulation, requiring ongoing supervision to mitigate potential risks."
In recent years, the Philippine online gambling industry has grown rapidly. According to data from the Philippine Amusement and Gaming Corporation (PAGCOR), the industry generated 112 billion pesos in revenue in 2024, with the electronic gaming sector contributing 48.79 billion pesos, nearly half of the total.
The Philippine government believes that exiting the FATF grey list will bring more investment and trade opportunities to the country, promoting overall economic growth. However, Citibank economists warn that merely exiting the grey list is not enough to stimulate manufacturing development.
"Exiting the grey list is certainly good news, but the investment opportunities in the Philippine manufacturing sector still require more effort," said Johanna Chua, head of emerging markets economic research at Citibank, during an interview with One News.
She pointed out that compared to countries like India, the Philippines still has shortcomings in infrastructure construction and supply chain development. "Manufacturing needs a complete ecosystem, including support for transportation, logistics, and supply chains, which are currently not competitive advantages for the Philippines."
Philippine statistics show that service exports reached 37.4 billion US dollars in the first nine months of 2024, a year-on-year increase of 6.25%. Annual service exports grew by 8.3%, accounting for 13% of the Gross Domestic Product (GDP). Johanna Chua believes that the core competitiveness of the Philippines remains in the service sector, not manufacturing.
Jesus P. Estanislao, former Minister of Finance and Socio-Economic Planning, considers the Philippines' successful exit from the grey list as a "very positive development," indicating that the country is moving towards a more transparent financial system.
"Being on the grey list for a long time was a burden on our international image. Now, we have shown the world that the Philippines is part of the global financial system and is committed to combating money laundering and crime financing," he said.
He added, "The government has taken a series of measures to clean up the financial system, and we successfully convinced the FATF to recognize these reforms, which is a milestone worth celebrating."
In terms of global trade dynamics, experts analyze that the Philippines is relatively less affected by the new US tariff policies.
"In Asia, the Philippines is one of the countries least affected by US tariff fluctuations, second only to India," Johanna Chua noted. She mentioned that India has attracted more attention due to increased investment in manufacturing, while the Philippines still relies mainly on growth in the service sector.
Markets are also closely monitoring US President Donald Trump's trade policies, which have imposed a 10% tariff on Chinese goods since he took office in January this year, and from March, tariffs on all steel and aluminum imports.
"At present, apart from the tariffs on China, other trade measures are more industry-specific adjustments and may become bargaining chips in negotiations," she added.
Despite the uncertain global economic environment, the Philippines' economic growth remains relatively stable. Johanna Chua expects the Philippine economy to grow by 5.9% in 2024, slightly below 6%, but still a strong performance compared to many emerging market economies.
"The growth of the Philippines remains resilient, but to reach the government's target of 6-8%, more efforts are needed in areas such as infrastructure and manufacturing investment," she said.
According to official Philippine data, the economic growth rate in 2024 was 5.6%, failing to meet the government's expected target of 6-6.5%. Economic managers hope that with improvements in the investment environment, higher growth rates can be achieved in the future.
