The Philippines economy has performed well since its third TPR in 2005, based on a relatively open trade regime. Nonetheless, the economy is operating below potential due to the slow pace of reform while some of the key constraints on overall growth remain (e.g. inadequate infrastructure, low investment, and governance issues). Improved productivity is essential for the Philippines to compete with low-cost neighbouring economies, and additional steps are needed to promote more competition, improve human capital, eliminate limitations on foreign investment, reduce incentives, and reform state-owned institutions. It is also hoped that the Government’s recently launched public-private partnerships initiative will encourage investment in major infrastructure projects.