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Business notes ‘firmer foundations,’ but cites need for more work to reel in investments

Posted on July 27, 2015

THE AQUINO GOVERNMENT, which formally enters its final year with the President’s State of the Nation Address today, has raised the bar for successors in terms of better governance, but much remains to be done to make the country a compelling case for investments, business leaders noted over the weekend.

“The greatest achievement of the Aquino administration is, without doubt, its good governance reform agenda. It has rekindled people’s hope for a corruption-free government,” Peter Angelo V. Perfecto, executive director of the Makati Business Club, said in a mobile phone message on Saturday, noting that “the seeds of a culture of integrity have been sown,” providing the next government with “firmer foundations” to build on.

But Francis Ed. Lim, president of the Shareholders’ Association of the Philippines, pointed out that “good governance alone will not do the trick,” because the Philippines “still badly trails behind” other countries in Southeast Asia when it comes to attracting direct foreign investments.

Latest available data from the Association of Southeast Asian Nations (ASEAN) show the Philippines’ net foreign direct investment (FDI) inflows last year -- a record-high $6.201 billion that was up 66% annually -- accounted for just 4.6% of ASEAN’s $136.181-billion total and was less than those of Singapore ($72.1 billion), Indonesia ($22.3 billion), Thailand ($11.5 billion), Malaysia ($10.7 billion) and Vietnam (9.2 billion). Latest central bank data show that the Philippines’ net FDI inflow fell 48.3% annually to $1.234 billion in the four months to April.

“Equally important is that the country must liberalize its investment climate. President (Benigno S. C.) Aquino (III) should ask Congress to amend the economic provisions of the Constitution,” Mr. Lim said via text.

Malacañang has never warmed to the idea and Speaker Feliciano R. Belmonte, Jr. said last June such proposal, which advanced up to second-reading approval in the House of Representatives, will likely have to start from scratch in the 17th Congress that begins its term with the new president in July next year.

In an e-mail, Henry J. Schumacher, executive vice-president of the European Chamber of Commerce of the Philippines, cited the state’s wrong moves or inaction on investor concerns, including “continuously playing around with the fiscal incentives menu”, “not honoring” a commitment to prompt value-added tax refunds and “midterm changes” in rules for some key infrastructure deals.

For John D. Forbes, senior advisor of the American Chamber of Commerce of the Philippines, gains since 2010 are just the start.

“The Philippines has, over a long period of time, suffered from cycles of better governance and poorer governance,” he told Reuters.

“It is in a cycle of better governance right now, but it has not proven its ability to make that sustainable in the long run.” -- Daphne J. Magturo