THE Philippines must ease restrictions on foreign investors and improve infrastructure to attract more investment, particularly from the United States, as crucial steps to expanding trade and growing the economy, a US official said.
“The Philippines is one of the most restrictive countries in the world against foreign investment, with more barriers than any other large Asean country,” US Embassy Manila Trade Officer Brian Breuhaus said in a statement over the weekend.
The constitutional restrictions on foreign investment, widely known as the 60-40 rule, must be relaxed, Breuhaus said.
The Constitution stipulates that only Philippine nationals are allowed to operate a public utility. This applies to nearly all public-private partnership (PPP) projects.
“No American firms have been involved in a PPP, and no foreign firms have taken the lead on a PPP, even though they could provide a huge amount of expertise. This would take a constitutional change,” Breuhaus said.
The Philippines can also relax the limits set under the Foreign Investment Negative List, he said.
Breuhaus underscored the need for better infrastructure, including roads, airports, seaports and internet connectivity.
For a start, a Single Window in Customs could make it easier for goods to be shipped here. The Trade Facilitation Agreement at the World Trade Organization must also be approved, the US official noted.
“This [Single Window] is a promise the Philippines has made under Asean,” Breuhaus stressed.
The US is among the largest foreign investors in the Philippines, with a current stock of $4.7 billion in Philippine placements.
The Philippines is the 30th largest source of US merchandise imports, and the 32nd largest export destination for US products.
Breuhaus noted the US-led Trans-Pacific Partnership Agreement (TPP) promotes economic growth, creates jobs and opportunities, and deepens economic integration in the Asia Pacific region.
The TPP covers 40 percent of global gross domestic product and 30 percent of world trade.