The Philippines is a country made up of more than 7,000 islands, which make up one of the most dynamic economies in the Asia-Pacific region. In fact, it has one of the fastest economic growth rates of the five largest economies in the Association of Southeast Asian Nations (ASEAN), behind only Vietnam, with a GDP that showed a growth of 5,6% in both 2023 and 2024.
Its economic dynamism is due in part to its young population of 116 million inhabitants, with an average age of 25 years. This population is highly digitalized, part of an expanding labor market with increasing purchasing power, and also has a widespread command of English.
In recent years, the Philippines has become one of the most attractive countries for foreign investment, especially in the infrastructure sector. The country has focused much of its efforts on developing policies that encourage foreign investment, both from neighbouring countries in Asia and Europe, including Spain in this sector, to boost its development.
An economy focused on infrastructure development
Many of these projects have been boosted following the launch of the “Build, Build, Build” initiative in 2017 by the Duterte administration, with the aim of reducing poverty, spurring economic growth, alleviating congestion and closing the infrastructure gap. A large number of the programs initiated then have continued to develop and evolve under the current administration, led by Ferdinand “Bongbong” Romualdez Marcos Jr., through the “Build Better More” program, which expands and continues the vision of his predecessor. Thanks to this approach, 194 projects have been approved to date, covering key sectors such as public transport, electricity, information technology, water management and agriculture, with a budget of around US$160 billion.
The improvement of infrastructure in the Philippines has also been driven by the strengthening of Public-Private Partnerships (PPP). This model of cooperation between private companies and government agencies has been essential in key projects such as the construction of Phase 2 of the Ninoy Aquino International Airport Expressway, jointly developed by the Department of Public Works and Highways and the private sector.
Legislative changes have also been implemented to facilitate collaboration between these sectors. In December 2023, the Philippine Public-Private Partnership Code (Republic Act 11966) was enacted, establishing a unified legal framework for the implementation of PPP projects at the national and local levels. Subsequently, the passage of its Implementing Regulations (IRR) in 2024 streamlined the approval process for these projects, with the aim of attracting foreign investment and promoting sustainable economic growth.
Towards a sustainable future: transport, water and energy in the Philippines
The emphasis on infrastructure development in the Philippines has not come out of nowhere. It responds to a specific situation on two fronts. On the one hand, it occurs in a context of rapid ASEAN growth, especially as global supply chains diversify away from China. ASEAN countries are well positioned to benefit from this trend and gain global relevance, so improving infrastructure becomes key to accelerating their development. On the other hand, the Philippines is one of the most vulnerable countries to climate change in the world, which drives the need for resilient projects that strengthen its adaptive capacity. Therefore, the country has focused its development on priority sectors, both to strengthen its internal growth and to promote collaboration with international actors.
Transportation is one of these priority sectors, encompassing roads, railways, ports and airports. The “Build Better More” initiative highlights the importance of expanding the road network, with key projects such as the Luzon Spine Expressway, which improves the interconnectivity of the country’s largest island. In the rail sector, initiatives such as the North-South Commuter Railway System and the first phase of the Metro Manila Subway Project, which seek to reduce urban congestion and improve mobility, are included.
On the other hand, water systems management has become another priority, reflected in the 2025 national budget. The country is particularly vulnerable to natural disasters, which it faces, unfortunately, with increasing recurrence. Therefore, the centralization of water resources and the development of infrastructures such as irrigation and flood control systems are essential to improve its resilience. Currently, the approval of the law for the creation of the Department of Water Resources (DWR) is expected before the end of the 19th Congress, along with the formation of a Water Regulatory Commission, another key legislative priority.
Finally, the transition to renewable energy is another key pillar in the development of infrastructure in the Philippines. The National Renewable Energy Program (NREP), with objectives to be developed between 2020 and 2040, has targets for increasing the share of renewable energy in the energy matrix: 35% by 2030 and 50% by 2040. The country has natural conditions that optimally position it to develop in this area, with an average solar radiation of between 1.500 and 2.000 kWh/m² per year and wind speeds of 4 to 7 m/s in most of its coastal areas.
Incentives and reforms for foreign investment
In order to attract foreign investors, measures such as reducing the minimum capital required for foreign retailers and simplifying their access to local micro and small businesses have been implemented. In addition, 100% foreign-owned companies can now operate public services such as airports, railways and maritime transport, as they are no longer considered “public utilities” and are not subject to 40% foreign ownership restrictions, although critical infrastructure services such as telecommunications still have limitations.
Under the Duterte administration, certain changes were also made to the country’s legislature, easing foreign nationality restrictions in key industries. In 2022, the Philippine Congress passed amendments to investment laws such as the Foreign Investment Act, the Public Service Act, and the Retail Trade Liberalization Act.
The current president has continued this trend. Another important reform is the changes to the Renewable Energy Law in 2022, which remove the nationality requirement for foreign entities interested in developing renewable energy. Now, 100% foreign-owned companies can participate in the exploration and development of solar, wind, hydroelectric and ocean energy, as long as natural resources such as water or geothermal energy are not involved, which are still subject to the 40% foreign ownership restrictions.
In addition to recent changes, the Philippines already has a favorable system in place to attract foreign investment. A key example is the Special Economic Zones (SEZs) in the country, such as the Freeport Area of Bataan and the Cavite Export Processing Zone, which offer attractive incentives for foreign investors, such as tax exemptions, simplified customs procedures, and access to government services. There are more than 400 SEZs in the Philippines, established by PEZA and regulated by laws such as Republic Act No. 7916. These zones cover sectors such as trade, industry, logistics, technology, and tourism, making them ideal destinations for investments, especially Spanish ones. In addition, they stand out for tax exemption, simplified procedures, and access to government services. In addition, the Ease of Doing Business Act (RA 11032), which establishes response times for transactions with the government and allows for automatic approval of procedures if they are not responded to within said timeframes.
Spanish business presence in the Philippines: innovation and growth
As for investments by Spanish companies in the Philippines, one of the most notable, especially in the area of infrastructure, is Acciona. The company has developed emblematic projects such as the bridge that links the islands of Mactan and Cebu, the longest and highest viaduct in the country, and the Southern Commuter Railway Project. In addition, the company recently met with the governor of Cebu to explore its participation in the construction project of the Cebu Expressway toll road, which will be more than 55 km long.
In the renewable energy sector, where Spain is a world leader, there have also been several notable collaborations between the two countries through this company. A key example is the participation of its energy subsidiary, Acciona Energía, which acquired 80% of Freya Renewables, a renewable development consultancy in the Philippines. Thanks to this partnership, the first public-private partnership in solar energy generation in the Philippines is being developed, with the construction and operation of a 150 MW solar plant in Daanbantayan. In addition, the company has recently announced the development of a 156 MW wind farm in Pantabangan, 150 kilometres north of Manila, and has begun construction of the Kalayaan 2 wind farm, with a capacity of 100 MW in Laguna province.
In addition to Acciona, several Spanish companies have gained prominence in the Philippines in various sectors. Indra, for example, manages more than 200 projects in the country, including the administration of digital services for the Asian Development Bank in Manila and the reform of Philippine air navigation systems.
IDOM, for its part, is preparing to obtain the largest renewable energy contract won by a Spanish company in the history of the Asian Development Bank.
Spain's interest in the Philippines has also extended to the defence sector, with Navantia offering to supply the country with two S-80 submarines in 2023, and Airbus delivering its last C-295 aircraft, manufactured in Spain, to the Philippine military.
Future opportunities for collaboration between Spain and the Philippines
The future of the relationship between Spain and the Philippines is full of opportunities for mutual collaboration, especially in key areas such as infrastructure, renewable energy and sustainability. The signing of a new cooperation agreement for the period 2025-2028, in the context of the VII Joint Spanish-Philippine Collaboration Commission, reflects the commitment of both countries to contribute to the strengthening of a more efficient and resilient democratic State in the face of the effects of climate change and natural hazards. This agreement not only underlines the growing importance of bilateral cooperation, but also opens the door to new joint projects that will maximize the Philippines' potential in strategic sectors.
In this sense, the XI Spain-Philippines Forum, organized by Casa Asia The 19 EU-Philippines Free Trade Agreement (EUFTA) and the Philippine Chamber of Commerce and Industry will be held in Madrid and Cuenca from 21 to XNUMX March and will be a key space to consolidate this cooperation. During the event, five sessions will be held, with a special focus on strategic issues such as the EU-Philippines Free Trade Agreement, the future of sustainability in port operations, and the best strategies for water management in both countries. These topics not only underline the common interest in advancing in areas of vital importance, but also contribute to strengthening ties in critical sectors such as trade, environment and infrastructure. The forum stands as an ideal platform to foster bilateral cooperation and move towards a more sustainable and prosperous future for both nations.
Department of Economics and Business Casa Asia
