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FOREIGN businessmen have not seen much improvement in the first year of the Aquino administration but are hopeful that as reforms take root, growth will speed up and foreign investments along with it.

"We’d like to see change. If the Philippines would do well, our members would do well," Henry Schumacher, a director of the European Chamber of Commerce of the Philippines, said at a press conference called by the Joint Foreign Chambers (JFC) six days before the second State of the Nation Address of President Aquino.

The JFC said that of the 283 reforms culled from its "Arangkada Philippines 2010," a rolling blueprint launched last December that seeks to accelerate growth and double or even triple foreign direct investments (FDIs) in five years, only 13 have been completed.

The JFC tagged the overall business environment and regulatory issues as well as foreign ownership limitation as culprits in the slow flow of FDIs.

Schumacher said while it is true that the Aquino government has inherited a lot of problems from its predecessor, the JFC expects to hear in Aquino’s second SONA "where are we going from here."

John Forbes, a director of the American Chamber of Commerce of the Philippines, did not detail the 13 accomplishments but said pocket open skies and the passage of a law on government-owned and controlled corporations are two of the more specific accomplishments.

"We remain very confident that if reforms are implemented, growth of the Philippine economy will accelerate and FDIs would double or even triple. If the administration goes twice as fast, the Philippines can begin to catch up since competitors are moving faster," Forbes said.

Forbes said except into business process outsourcing, foreign investments are not coming fast enough, citing the slow entry of mining investments as well as the slow take-off of public private partnership (PPP) projects.

Forbes said the reforms that should be addressed are on infrastructure and on the judiciary.

The JFC, in its discussions with the Supreme Court, the Ombudsman and the Department of Justice, has noted that "too many cases and delayed justice" have hindered the flow of investments.

"The use of temporary restraining orders is a business harassment issue. It is major issue among business. Orders getting reconsidered twice or three times means there is no certainty," said Julian Payne, president of the Canadian Chamber of the Philippines.

"The Philippines is blessed but it’s just how you explore it. Your Mining Act is a very good law. It is a model, provided that it is implemented fully and properly," said Payne.

But he acknowledged that the Mining Act has spawned it own problems.

"One is small-scale mining has brought the Mining Act to disrepute (because the practices are) not in conformity with the Mining Act. Second, there is the dichotomy between policies of the national government and the policies in the local government units which don’t support mining," he said.

He added that since mining investments require hundreds of millions of dollars and take 5 to 10 years to get started, "you should have a plan for the next 20 years."

Consistency plays a big part, according to Payne. "No investor would come in if they put in millions of dollars only to be overturned next week."

A case in point is the delay in the implementation of the $6 billion Tampakan mining project.

Payne added that PPPs should be made more attractive to attract investors.

"The bottom-line in PPP is that you are asking the private sector to invest big money," Payne said. "You can’t divorce it from the regulatory environment. Unless you improve the business and regulatory environment, you will not get investors in PPP."

Forbes said investors want written documents of global standards that they can take to the banks for financing.

JFC said the Philippines lacks such a capacity.

Schumacher said ownership limitation is "making life difficult" for investors, particularly the 60-40 rule in favor of Filipinos in extractive industries and utilities.

"We hope the debate on this would lead to a decision to open the economy for investors to create more competition," he said.

The JFC wants "viable options" in order to participate in projects where the Constitution limits foreign ownership.

Various laws and rulings have removed some sectors from the category of public utility, which is generally reserved for Filipinos. These sectors include power generation under the Electric Power Industry Restructuring Act, shipyards and refining of crude oil.

"The nationality restriction does not apply (in these sectors), thereby paving the way for up to 100 percent foreign ownership," the JFC said.

"By providing prospective foreign investors with viable options, we can revive investor interest in the country and fully realize the economic growth potential that the PPP policy holds," the JFC said.

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Source: Malaya Business Insight
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