By: Ted P. Torres
In the absence of a definitive ruling lifting restrictions on foreign ownership in domestic economic activities, the Philippine government should instead initiate steps to speed up the entry of foreign direct investments (FDIs), the country’s former chief economic planner said.
Recently, legislators opened the country’s banking system to foreign ownership.
Former Socioeconomic Planning Secretary and National Economic and Development Authority director general Cielito F. Habito said the government, for instance, could transform the Bureau of Customs (BOC) into a development-oriented agency, redefine the restrictive list in the 1997 foreign investment regulations, and the composition of the utilities sector, and open more industries to competition.
In a forum discussing the World Investment Report 2014, Habito likewise outlined several restrictions that continue to keep FDIs away from the Philippines and moving into Vietnam, Myanmar, Malaysia and Thailand.
Among these restriction are: inadequate infrastructure, high cost of electricity, cumbersome trade transaction processes, governance/corruption hurdles up to the local government unit (LGU) levels, and the constitutional restriction on foreign ownership.
Habito said one benefit of aggressive FDI inflows is that it would challenge the dominance of domestic conglomerates in the Philippines.
“FDIs can challenge the conglomerate’s dominance in the industry of telecommunications, property, finance, information and communications technology (ICT), among others,” he added.
In the World Investment Report 2014, released annually by the United Nations Conference on Trade and Development (UNCTD), the Philippines placed last among six Southeast Asian nations that include, Singapore, Indonesia, Thailand, Malaysia and Vietnam.
In 2013, the Philippines registered $3.86 billion in FDI inflows. Vietnam accounted for $8.9 billion, Malaysia $12.3 billion, Thailand $ 12.9 billion, Indonesia $18.4 billion, and Singapore $63.8 billion.
However, the Philippines claims it recorded the fastest growing FDI inflows in the same period, expanding 118 percent in the first three quarters last year.