Corruption still top deterrent to US investment in PH
April 1, 2011 at 16:37
The United States has cited various barriers to trade and investments in the Philippines that block American business’ entry into the country, but corruption, “a pervasive and longstanding problem in the Philippines,” still tops the list.
In its National Trade Estimate (NTE) report posted on its website, the US Trade Representative said reports of corruption remain common.
“Foreign and domestic investors express concern over the propensity of Philippine courts and regulators to stray beyond matters of legal interpretation into policymaking and about the lack of transparency in these processes. There also are reports of courts being influenced by bribery and improperly issuing temporary restraining orders to impede legitimate commerce,” the USTR said in the NTE.
The report cited that over and above Constitutional restrictions on ownership of businesses, the Philippines has import policies that bar trade such as in automotive, which hinders exports of motorcycles from the US; corruption in the customs bureau; inconsistent implementation and delays in government procurement; non-completion of legislative reforms in intellectual property protection; among other things.
The USTR cited business community reports on the lack of transparency in regulations such as on taxation as well as unresolved land disputes that deter investment in mining.
“The Philippines also bans heavyweight motorcycles from highways. Permitted by most countries, heavyweight motorcycles are designed for highway use, with traffic studies in most other developing countries demonstrating there is no underlying safety rationale for such a ban. These restrictions severely limit the export potential for US-built motorcycles,” the NTE said.
The report said despite efforts of the Philippines to streamline payment and permits processing at many government agencies, reports of corruption and other irregularities in customs processing persist, including undue and costly delays, continued private-sector involvement in the valuation process, the use of reference prices rather than declared transaction values, and customs officials seeking the payment of unrecorded facilitation fees.
It said some exporters report, for instance, that customs does not recognize their free-on-board prices and instead applies a higher dutiable value based on other information.
“The US government will continue to work with the Philippine government to address these issues,” the report said.
The Government Procurement Reform Act of 2003 aimed to consolidate procurement laws, simplify prequalification procedures, introduce objective and nondiscretionary criteria in the selection process, and establish an electronic single portal for government procurement activities.
The US, however, said implementation remains inconsistent.
“US companies have expressed concern about delayed procurement decisions, delayed payment, and different interpretations of the procurement law by different Philippine government agencies,” the NTE said.
On intellectual property rights protection, the Philippines was placed on the watch list in the 2010 Special 301 report.
The report said the US has encouraged the Philippines’ ongoing efforts to address inefficiencies in the judicial system and to establish specialized regional courts with rules designed to improve the legal consistency in rulings so that rights holders have a reliable avenue for recourse and prosecutions move forward effectively and without delay.
While welcoming the enactment of an anti-camcording bill, the US noted it has not yet been implemented.
The US also encouraged the Philippines to complete its work on legislative reforms needed to strengthen individual property rights (IPR) protection, including the implementation of the WIPO Internet Treaties, which have been pending in congress.
The NTE cited business community reports of a lack of transparency in regulations and laws that serve to also hinder foreign investment in the Philippines. For example, businesses report that their efforts to comply with taxation laws and regulations are frustrated by the lack of clarity and accessibility of tax information. The business community has also expressed concern about weak enforcement of anti-smuggling laws and regulations as an obstacle to investment.
The Philippines is the US’s 30th largest export market.
The Philippines trade surplus with the US has widened to $609 million in 2010, down $418 million from 2009. US goods exports in 2010 were $7.4 billion, up 27.9 percent from the previous year.
Corresponding US imports from the Philippines were $8 billion, up 17.5 percent.
Foreign direct investment (FDI) of Americans in the country was $5.8 billion in 2009, up from $5.6 billion in 2008. US FDI in the Philippines is mostly in the manufacturing sector. – Irma Isip
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