Despite the flood control scandal and ongoing governance concerns, European companies retain a generally optimistic view of the Philippine business climate heading into 2026 — though the European Chamber of Commerce of the Philippines (ECCP) emphasized that significant room for improvement remains.

In its 2025 Business Sentiment Survey, the ECCP said overall confidence in the country’s long-term prospects remains solid despite near-term concerns.

About 79 percent of respondents said they plan to maintain or expand their investments, while only a small minority expect to scale down. More than 70 percent also anticipate increasing their workforce in the next 12 months — a sign that European firms still see the Philippines as a competitive labor market.

However, sentiment on current business conditions has weakened. Only 54 percent of companies rated today’s business environment favorably, reflecting concerns over inflation, peso volatility, and global uncertainty. A majority identified high operating and logistics costs (57%) and regulatory burdens and slow government processes (62%) as key barriers to growth.

Infrastructure gaps remain a major concern. Nearly 60 percent of companies cited inadequate transportation, logistics, and energy infrastructure as hurdles to stronger economic activity. On a positive note, investors acknowledged improvements in digitalization, with over 70 percent noting progress in government e-services — though many stressed the need for faster implementation.

On sustainability, 85 percent of European companies reported integrating ESG practices, driven largely by global compliance requirements and the upcoming rollout of EU sustainability regulations. Firms emphasized the need for clearer Philippine policy direction on renewable energy, green financing, and climate-resilient investments.

Despite these challenges, the ECCP said the Philippines remains well-positioned to attract foreign capital if economic and regulatory reforms advance more quickly, citing strong consumer demand, a young workforce, and emerging opportunities in the energy transition and digital services sectors.

The report emphasized that investor optimism can translate into sustained foreign investment if the government delivers stronger policy support, urging authorities to focus on improving ease of doing business, accelerating infrastructure development, and ensuring more predictable regulations in 2026.