At least $10 B yearly FDI possible with reforms — JFC

By Richmond Mercurio (The Philippine Star) 

MANILA, Philippines —  The Philippines can easily attract at least $10 billion in foreign direct investments (FDI) annually once existing restrictions and improvement on its overall competitiveness are addressed, the Joint Foreign Chambers (JFC) of the Philippines said.

JFC officials said yesterday while the country may be considered the “rock star of Southeast Asia” as far as economic expansion is concerned, it remains a laggard in terms of FDI due to several factors affecting its business environment.

“The Philippines should receive $10 billion a year. But what is preventing the country’s economy from running on all cylinders? Growth of business processing, manufacturing, and tourism have been high, but the growth of agriculture has been weak and mining has moved backward despite its high potential,” Japanese Chamber of Commerce and Industry of the Philippines president Hiroshi Shiraishi said.

“The really relevant criteria is how we are doing compared with our leading ASEAN neighbors such as Vietnam, Thailand and so on. Our target should be to have at least the ASEAN average in FDI. And we still have a long way to go,” Canadian Chamber of Commerce of the Philippines president Julian Payne said separately.

The country’s net FDI last year zoomed 40 percent to a new record level of $7.9 billion, surpassing the full-year target of $6.7 billion.

“The key point is how quickly the new administration can proceed with its stated intention to remove restrictions of FDIs. There have already been a number of initiatives,” Payne said.

In a new Arangkada Project publication released yesterday, the JFC outlined various recommendations on reducing cost of doing business and increasing competitiveness and ease of doing business in the Philippines.

“There was a lot of concern about the reputation impact of the extrajudicial killings. But most companies have realized that in most sectors, it hasn’t changed the day-to-day operating environment and most companies are pushing ahead,” Australian-New Zealand Chamber of Commerce of the Philippines president Tom Grealy said.

“The underlying economic management is good, and there is fundamental reform coming which will potentially set the Philippines up for the next 20 years, particularly the tax reform so it’s quite actually an exciting time,” he added.

With regard to tax reform, the JFC said concerns have been raised by its members over proposed provisions in the first TRAIN that could have negative effects on business process management, ROHQ, automotive, and beverage firms.

The group said some of these concerns were ameliorated in the House version of the new law, while others may be resolved in the Senate and the bicameral reconciliation process.

“JFC members support taxes that are more progressive than regressive, that incentivize individuals and corporations to work hard to produce income, save, and invest, that impose a significant burden of taxation on consumption, support investment and job creation, support needed physical and social infrastructure programs, and are collected fairly, fully, efficiently, and without corruption,” the group said.


PH plays catchup on FDIs

September 15, 2017

The Philippines should catch up with Asean countries in terms of attracting foreign direct investments (FDIs) but foreign investors said this will depend on how fast government would be able to remove restrictions.

While the Philippines has broken out of its low level of FDIs – from $1.1 billion in 2010 to $7.9 billion in 2016 and h averaged $6.5 billion per year — – the number still lags behind Asean, according to John Forbes, chief of party of the Arangkada Philippines Report and senior adviser of the American Chamber of Commerce of the Philippines.

The Philippines breached the Arangkada target of $7.5 FDIs but the group will not set any new targets.

The Joint Foreign Chambers had said FDI should be targeted to exceed $10 billion and be measured in erms of jobs and exports generated.

Forbes said the group is not making an assessment of the Arangkada goals but said these have been updated to reflect the 10-point agenda of the Duterte administration and the Philippine Development Plan.

Julian Payne, president of the Canadian Chamber of Commerce of the Philippines for his part said the relevant criteria here is how the Philippines fares with Vietnam and Thailand.

But Payne said the key point is how quickly the administration proceeds to remove the restrictions on foreign investments.

There have been moves to lift foreign restrictions on public utilities as well as on construction. The Foreign Investment Negative List is also being reviewed.

“With these initiatives, it obvious FDIs will grow but to set a specific target is risky… it’s better to benchmark with the Asean average… (the Philippines is) clearly below it,” Payne said.

In 2015, the Philippines attracted $5.7 billion FDIs which pale in comparison with Singapore whose FDIs stood at $61 billion; Indonesia $17 billion and Malaysia and Vietnam with more than $11 billion each and Thailand’s $8 billion.

Ernesto Pernia, socioeconomic planning secretary, said he wants to “drastically shorten” the FINL and that he supports aggressive liberalization to be able to open up more business areas to foreign investors.

Pernia told reporters on the sidelines of the Forum the current draft is a long list and “ I want to really shorten it drastically.”

Pernia said areas up aggressive liberalization are retail trade, certain professions, public utilities, and contractors. “

The final form will be more aggressive, it will be closer to the Asean. There are many things in there they are not increasing it by 40 to 60 percent equity, I said bring it up to 100 percent for certain areas,” Pernia said.

Pernia cited professors, as one of the professions that will be likely removed under the FINL.

The Regular Foreign Investment Negative List, which was last promulgated by the previous administration in May 2015 through Executive Order No. 184, enumerates the investment areas and activities reserved exclusively for Filipinos as well as industries where foreign equity of up to a maximum of 40 percent is allowed, as mandated in the Constitution.

The review of the FINL issued periodically by Malacañang under the Foreign Investments Act of 1991 started in May this year.

The Duterte administration seeks to open up the economy by lifting economic restrictions in the Constitution, in order to open more business areas to foreign investors. Under the 2015 Negative List, 100 percent foreign participation is allowed only for retail trade enterprises under certain conditions specified in Republic Act 8762 or the Retail Trade Liberalization Act and also in the rice and corn industry under certain conditions. The 2015 list also allows full foreign participation in the exploration, development and utilization of natural resources through financial or technical assistance agreements with the President. — I. Isip. and A. Celis


Diokno thinks 2018 budget deadlock unlikely to happen

(UPDATED) While Budget Secretary Benjamin Diokno is not worried over conflicts on the proposed budget of the Commission on Human Rights, a foreign business leader says the issue is ‘not sending the right signals’ to investors

MANILA, Philippines (UPDATED) – Budget Secretary Benjamin Diokno said a deadlock over the 2018 budget is unlikely to happen, as the Senate and the House of Representatives will likely find common ground on the budget of the Commission on Human Rights (CHR).

A deadlock would mean reenactment of the P3.35-trillion 2017 budget, if the P3.76-trillion 2018 General Appropriations Act (GAA) would not be passed.

 “I don’t think it will happen,” Diokno told reporters on the sidelines of the Arangkada Philippines Forum 2017 in Pasay City on Thursday, September 14.

“At this time, I’m not worried about what’s going to happen. I’ll just look at what will come out of the third chamber (bicameral conference committee). Let’s not speculate on what’s gonna happen,” he added. (READ: How the House voted for a P1,000 CHR budget)

On Wednesday, September 13, Senate Minority Leader Franklin Drilon warned of a possible deadlock in the 2018 budget, should the House insist on a P1,000 budget for the CHR, the constitutional body mandated to look into alleged abuses by state forces.

While the House approved a measly P1,000 budget for the CHR, the Senate vowed to restore the proposed P678-million allocation.

“The budget process is like this – we submit the budget to the House, copy-furnish the Senate, so the House, under the Constitution, has the first crack at the budget. If there are disagreeing provisions, they will form what is called a [bicameral] conference committee or what we call the third chamber,” Diokno said.

The committee will be composed of lawmakers from the Senate and the House, tasked to reconcile differences and come up with a national budget that is acceptable to both chambers. (READ: Bicol lawmaker: P1,000 budget a ‘wake-up call’ for CHR)

“Under the Constitution, each branch of government – the executive, the Senate president, the senators, the House, plus the constitutional commissions – they can augment. So as long as there is a P1 budget there, it can be augmented,” Diokno said.

‘Wrong signals’

While Diokno is not worried over conflicts on the proposed budget of the CHR, the European Chamber of Commerce of the Philippines (ECCP) said slashing the allocation to P1,000 is “not sending the right signals” to investors.

“We will not be able to grow [investments] if we can’t contain peace and order. It is vital to bring businesses here. More so with ASEAN (Association of Southeast Asian Nations) integration, people have more options on where to project their investments,” ECCP president Guenter Taus said in a press briefing.

He pointed out the 14% decline year-on-year in net inflow of job-creating foreign direct investments (FDI) to $3.6 billion in the 1st half of the year.

“We have to look at long-term solutions, meaning that goes with the political stability of the country,” Taus told reporters.

Aside from the CHR, the Energy Regulatory Commission and the National Commission on Indigenous Peopleswere also given a P1,000 budget each. –