Foreign direct investments (FDI) in the country could increase by at least three times once lawmakers passed bills that will further open up the Philippine economy, a Cabinet official said on Monday.
“Concerning FDI, the Philippines is the most restrictive country in the Asean. In Vietnam, practically all areas of FDI is 100 percent, foreign participation is allowed. Here in the Philippines, there are so many areas where FDI is only partially open to foreigners,” Socioeconomic Planning Secretary Ernesto Pernia said on Monday.
“So the legislature really should pass many of these bills such as the foreign investment act, retail trade act, and the public service act, and with those three acts passed and liberalizing the economy, we could really expect much more foreign investment, tripling or quadrupling what we have already achieved,” added Pernia.
The Retail Trade Liberalization Law seeks to do away with barriers to foreign investments by easing the equity and capitalization requirements to create more favorable investment climate in the country.
Amendments to the Foreign Investment Act on the other hand, seeks to reduce the threshold for foreign investors investing $100,000 in small and medium enterprises from 50 to only 15 direct employees. It also proposes to exclude ‘practice of professions’ from the coverage of the Foreign Investment Act.
Senate Bill 1754, which will amend Commonwealth Act No. 146 or the Public Service Act proposes that the transmission of electricity, distribution of electricity, and water works and sewerage systems shall make up the exclusive list of public utilities.
Data from the Bangko Sentral ng Pilipinas (BSP) said net inflows of FDI dropped by 15.1 percent to $1.9 billion in the first quarter of the year from $2.3 billion in the same quarter last year. BSP said this was due to the lower net inflows of net equity capital, which amounted to $295 million from $887 million last year.
In particular, equity capital placements went down to $568 million from $996 million, while withdrawals increased to $273 million from $109 million.