PH only ‘half open’ for business
REGIONAL think tank Stratbase ADR Institute (ADRi) supports amending the restrictive economic provisions of the 1987 Constitution to fully unleash the growth potential of the Philippines.
In a statement, ADRi said that the government has an opportunity to give “tuwid na daan” a lasting legacy by making the Philippines a viable economic destination and instituting reforms to allow for the blossoming of a new entrepreneurial culture.
A World Economic Forum (WEF) study cited the Philippines as the “most improved country overall” but the study also showed that despite some improvement, the Philippines still lags behind Asean neighbors Singapore, Malaysia, Indonesia and Thailand in competing for foreign direct investments (FDI) which is crucial to job creation and sustainability.
Prof. Victor Manhit, president of ADRi, said, “The limits set by the country’s constitution on foreign equity in real estate and in key industries has set up a half-open and restrictive business environment that has frustrated the influx of much needed foreign direct investments (FDI)”.
In the most recent issue of SPARK, ADRi’s publication, the institute stated that if the Philippines is to promote itself as an investment destination and facilitate the entry of FDI, the country must bring its policy on foreign ownership to global standards, relaxing the limitations on foreign ownership.
Based on official data from the central bank, the Philippines attracted over $6.2 billion in net foreign investment in 2014.
While this is a vast improvement from just a few years ago, these figures are dwarfed by the FDI attracted by Singapore ($67.4 billion), Indonesia ($25.6 billion), Thailand ($11.8 billion), Malaysia ($10.4 billion) and Vietnam ($8.9 billion) in the same year.
The FDI Regulatory Restrictiveness Index (FDI Index) of the Organisation for Economic Cooperation and Development (OECD) shows that Singapore, which attracted the most FDI in the region, was also the most open when it came to FDI regulatory restrictiveness, while the Philippines was shown to have the most closed policies among all economies included in the study.
Vietnam is moving to relax its foreign ownership rules, recently allowing foreigners to buy residential real estate, which is expected to pave the way for a fresh wave of foreign investment to enter the country’s property market.
“The realization of the Asean Economic Community (AEC) by the end of 2015 will create both opportunities and challenges for the Philippines but if the country is to take full advantage of Asean integration, the country must introduce essential reforms including the liberalization of key sectors of the economy,” Manhit said.
“Amending the economic provisions of the 1987 Constitution as proposed by House Speaker Feliciano Belmonte is a necessary step if we are to usher in an open and more competitive Philippine economy to directly benefit poor Filipinos,” he added. ADRi