PETALING JAYA: The liberalisation of the banking sector in the Philippines has made the already attractive investment destination even more appealing, especially with word of new plans to restrict foreign ownership of local banks in the current preferred expansion market for banks in Indonesia. "We've been seeing a lot of foreign direct investment (FDI) in the Philippines, a lot of double-digit improvements in the FDI statistics for the Philippines this year as the government remains committed to improving the infrastructure for the Philippines and the past few years of good growth has enhanced its reputation as well," Standard Chartered Bank's Singapore-based economist Jess Ng told SunBiz. He added that the Philippines received an investment grade rating last year by three (leading) rating agencies and there is increased optimism in the economy on the domestic and international front, though there are still some infrastructure bottlenecks that need to be addressed before growth limitations can be removed. "Having the banking sector liberalised is one good sign that a lot of these bottlenecks are being gradually removed one by one. The Philippines is attractive because it is still relatively undeveloped and there are a lot of opportunities." Ng said the Philippines have always focused on agriculture and business process outsourcing and over the past few years, growth in the financial sector has been quite healthy, indicating upside potential in the financial sector. With a population of about 100 million, which is five times that of Malaysia, the Philippines has an abundant labour force that is English-speaking and provides an added advantage for overseas companies. Earlier this week the Philippines announced that local banks can be 100% foreign owned under a new law. The law replaces one which had capped foreign ownership of banks at 60% and the entry of just 10 foreign banks. MIDF Amanah Investment Bank Bhd analyst Kelvin Ong sees interest from Malaysian banks in wanting to expand to the Philippines in light of this development. "Philippines and Thailand are opening up already and obviously once you open up, definitely there will be interest (to expand there). "CIMB Group Holdings Bhd is looking at the Philippines and this (liberalisation) will be positive for them," Ong told SunBiz. Yesterday a daily in the Philippines reported that CIMB is eyeing Philippines' Al-Amanah Bank for between 50 billion pesos (RM 6.83billion) and 100 billion pesos (RM13.6billion). Of Malaysia's two largest banks, CIMB has the biggest chunk of overseas contribution to earnings, with more than 40% from regional operations. In 2013, Indonesia contributed 30% of earnings. As for Maybank about 30% of pre-tax profits came from outside Malaysia, with Singapore contributing the biggest chunk at 14.1%, while Indonesia brought in 7.4%. The liberalisation of the Philippines' banking sector is in tandem with the Asean Economic Community's (AEC) goal of regional economic integration by 2015. The AEC foresees a single market and production base, a highly competitive economic region, a region of equitable economic development and full integration into the global economy. "With the AEC 2015 around the corner, we expect greater integration among the AEC member countries. The member countries will have to come up with policies which are consistent with the objectives of AEC," said Ong. Ng also said that on a macro-economic basis, the Philippines continues to have considerable growth potential in the medium to long term. He said growth in the Philippines is expected to be one of the highest in Southeast Asia and is likely to continue to outperform the average growth of Southeast Asian countries. He added it is still eyeing the political developments in Indonesia following Joko Widodo's victory in the Indonesian election. "We're waiting for the new government to be set up and (there will be) a new chapter in the sense that there will be a new party in charge. There will likely to be a new direction and we're waiting to see the policies that will be implemented after the new government is formed," said Ng.