A further slump in the inflow of foreign direct investments (FDIs) in the Philippines looms in the coming months unless the government eases its restrictive policies, the country’s largest business organization said.
Philippine Chamber of Commerce and Industry (PCCI) president Alfredo Yao told The STAR in an email that the Philippines appears the weakest among Asean countries in protecting its investors from local intervention.
“Government can do more to strengthen the structural and regulatory framework and increase spending in infrastructure projects,” Yao said.
Yao cited the recent exit of Anglo-Swiss miner Glencore Xstrata Plc from its Tampakan gold-copper project in Mindanao as an example of the country’s weakness in shielding foreign investors.
He said the Glencore incident is a “red mark in the country’s image” that puts into question the stability of its regulatory framework.
“It is disturbing to note that one of the world’s largest mining companies has exited the country, leaving behind the Tampakan project, which has been touted as potentially the country’s largest FDI. If the same issues of instability in the regulatory framework and rule of law that Glencore faced will not be resolved, the Philippines will continue to lag behind its neighbors in the region in terms of getting quality FDIs, meaning those that create jobs and value-added to the economy,” he said.
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A recent study by the Economic Research Institute for Asean and East Asia has affirmed the Philippines is among the more restrictive economies in the Southeast Asian region in terms of FDIs.
Aside from regulatory issues, Yao cited other challenges such as port congestion and the instability in power supply as reasons slowing investor interest in the country.
“The port congestion problem is the direct effect of the absence of an integrated transportation and logistics policy and the instability in power supply is reflective of the lack of investments and absence of competition in power generation,” he said.
The PCCI, however, lauded several improvements undertaken by the government in recent months such as the streamlining of processes of starting a business – which was reduced to six steps in eight days from 16 steps for 34 days – and the passage of the Philippine Competition Law.
International business groups such as the American Chamber of Commerce of the Philippines and the European Union-Association of Southeast Asian Nations Business Council have earlier advised the Philippines to re-examine some of its policies to attract the inflow of more FDIs into the country.
FDIs plunged 43 percent year-on-year in April 2015 to $382 million, according to the Bangko Sentral ng Pilipinas.
Yao said PCCI, for its part, would continue working to expand bilateral cooperation of the Philippines with emerging markets like Brazil, Russia, India, Indonesia, China and South Africa.
“We are enjoining our business councils to explore all of the available avenues that these councils and other networks provide for facilitating greater trade and investment,” he said.
The PCCI said it has received interests from foreign investors mostly in the sectors of information technology-business process outsourcing (IT-BPO), agriculture/agri-business, energy (renewable, oil and gas), as well as construction and retail trade.
Source: The Philippine Star