SENATOR Sherwin T. Gatchalian said Thursday that he intends to present to the plenary a bill amending the Foreign Investments Act (FIA) of 1991 to improve the country’s standing as a foreign investment destination in Southeast Asia.
“With only nine session days remaining, we hope to sponsor a measure amending the Foreign Investments Act (FIA) of 1991, which is essential to put the country in a competitive position over other ASEAN (Association of Southeast Asian Nations) countries in terms of attracting businesses and investments by providing clarity to foreigners who are interested in investing in small and medium enterprises or practicing their profession in the Philippines,” Mr. Gatchalian said in a statement.
Asked on the chances of the proposed measure to achieve third-reading approval in the Senate before the 17th Congress ends, Senate President Vicente C. Sotto III said in a text message to BusinessWorld, “It depends on whether it’s controversial or not.”
The chair of the Senate committee on economic affairs said the “poor standing” of the country’s Foreign Direct Investment (FDI) inflows among ASEAN member states signals the need for “immediate implementation of economic reforms that will foster a more competitive business environment.”
“Based on our own analysis, macroeconomic risks such as higher than expected inflation in 2018, the country’s restrictive investment environment, and poor infrastructure quality — particularly on transportation and logistical infrastructure — remain the key stumbling blocks,” he said.
Senate Bill No. 2102, filed by Mr. Gatchalian, reduces to 15 from the present 50 direct local hires the minimum employment requirement for small- and medium-sized domestic enterprises with 40% equity with minimum paid-in capital of $100,000 that will be allowed to set up shop in the country.
It also excludes the practice of professions from the coverage of the Foreign Investment Act (FIA) to allow other laws to govern the rules regarding foreign nationals practicing their profession in the Philippines.
Mr. Gatchalian has said the bill would be among the priority measures of the Senate committee on economic affairs for the remainder of the 17th Congress. Its counterpart measure in the House of Representatives obtained third-reading approval on Jan. 14.
The Joint Foreign Chambers (JFC) of the Philippines has expressed support for such amendments. In a statement on Jan. 24, the JFC said that the minimal restrictions for foreign investors will enable the development of small foreign-owned enterprises in the design and information technology sectors as well as other similar businesses started with a few employees.
According to the Bangko Sentral ng Pilipinas (BSP), foreign direct investment net inflows fell 4.4% to $9.802 billion in 2018.
Aside from the proposed amendments to the FIA, Mr. Gatchalian called for the passage of the bills amending the Public Services Act and the Retail Trade Liberalization Act to “foster an inclusive, efficient, and competitive business environment in the Philippines.” — Camille A. Aguinaldo