First, it's not in a plain file, it's in a php file, which cannot be read as php-source from the outside world.
But he is correct in saying that things could be more secure.
You can use variables or constanct instead of the haardcoded strings:
ifc_connect($host,$user,$password)
You can include() these vars from a file that is located outside your webserver's document root, so only php and yourself can access it.
<?
// ifc vars
$host="foo@bar";
$user="foo";
$password="bar";
?>
Now for hacker to get access to the data he must:
a) become root on your webserver
or
b) Get access to place PHP scripts on your server, and correctly guess the location and name of your php file.