Policy risks hold back German investments

German companies are increasingly optimistic about the Philippines, but regulatory uncertainty and high operating costs still discourage new investment despite improving business prospects.

The German-Philippine Chamber of Commerce and Industry (GPCCI) said on Monday that its Fall 2026 AHK World Business Outlook Survey found that 68 percent of respondents expect better business over the next 12 months, while 61 percent rated current operations as good, up from 34 percent six months ago.

Yet only 27 percent expect the broader Philippine economy to improve, exposing a widening gap between corporate confidence and the country’s investment climate.

Despite stronger business prospects, 58 percent of firms plan to maintain current investment levels, while 56 percent expect no change in employment.

“The results are clear. Our member companies have stabilized their operations and are more confident about their own business than they were six months ago,” GPCCI President Dr. Christian Scheld said.

“Turning that interest into investment depends on rules that are applied consistently and decisions that are made on time.”

Economic policy conditions emerged as the biggest business risk, cited by 61 percent of respondents, followed by energy prices at 56 percent, exchange rates at 42 percent and legal certainty at 39 percent.

“The most telling result is the distance between how firms see their own prospects and how they see the economy around them,” GPCCI Policy and Advocacy Committee Chairperson Dr. Marian Norbert Majer said.

“Business expectations now stand 63 points above expectations for the local economy, the widest gap since 2020.”

Meanwhile, the proposed European Union-Philippines Free Trade Agreement could unlock fresh capital, with 57 percent of respondents expecting to increase investments within three years of its implementation.

Another 20 percent see opportunities to shift sourcing or production from other ASEAN countries to the Philippines.

However, businesses warned that customs delays, inconsistent regulations and tax administration practices could weaken the trade deal’s benefits.

“Our members are telling us they want to grow here, and the FTA gives them one more reason to do so,” GPCCI Policy and Advocacy Committee Vice Chairperson Marie Antoniette Mariano said.