THE National Economic and Development Authority (NEDA) told Japanese businesses that three pending laws representing major reforms will facilitate new investment in the Philippines.
Speaking in Osaka for the Philippine Economic Briefing (PEB) on Feb. 22, Socioeconomic Planning Secretary Ernesto M. Pernia said amendments to the Retail Trade Act, Foreign Investment Act and the Public Utilities Act will encourage more foreign investment in the Philippines.
“Besides our growth story that tells of the Philippine economy’s higher growth trajectory, there are several policy reforms already in place to accommodate more foreign investors in the country,” Mr. Pernia was quoted as saying in a statement sent to reporters yesterday.
The bills amending Republic Act (RA) No. 8762 or Retail Trade Liberalization Act seek to eliminate barriers to foreign investment by setting the minimum paid up capital to $200,000 and scrapping the minimum investment requirement of $830,000 per store.
Currently, the law provides a $2.5 million capital requirement for entrants that are wholly-owned by foreign entities.
“This should improve investment in the manufacturing sector, including small and medium-sized enterprises (SMEs),” Mr. Pernia said.
The House version of the bill is likely to secure third and final-reading approval when the legislative session resume after the May 13 mid-term polls. However, the bill’s fate in the Senate remains uncertain, amid opposition from small businesses.
“We are also proposing modifications in the Foreign Investment Act to reduce the threshold for foreign investors investing $100,000 in SMEs from 50 to only 15 direct employees,” Mr. Pernia added.
The measure also removes the practice of professions from the coverage of the Foreign Investment Act to allow other laws to govern foreign nationals practicing their profession in the Philippines.
The measure relaxing restrictions in the Foreign Investments Act could be one of the bills that could secure approval in the remaining days of the 17th Congress between May 20 and June 7.
Meanwhile, the Senate bill to amendment the 83-year-old Public Service Act is pending on second reading as of March 2018.
The amendments seek to provide a statutory definition of a public utility, which have been used interchangeably with public services over the years, causing confusion on whether certain sectors are subjected to foreign equity restrictions.
“It proposed that the transmission of electricity, distribution of electricity, and water works and sewerage systems shall make up the exclusive list of public utilities,” NEDA said in its statement.
Mr. Pernia told his audience that consumer and government spending are expected to pick up with headline inflation seen easing further this year.
Inflation was 4.4% in January, the third straight month it declined after hitting a nine-year high of 6.7% in September and October. The Bangko Sentral ng Pilipinas now expects inflation to average 3.1% this year after coming in at 5.2% in 2018, the highest in a decade.
“What is more, with the passage of the Ease of Doing Business Law and 11th Foreign Investment Negative List, we expect investors to pick up further, which should bring in more spending, and therefore sustain growth at a higher level,” Mr. Pernia added.
The central bank reported on Feb. 12 that foreign direct investment (FDI) posted a net inflow of $9.061 billion in the 11 months to November, down 3.2% from a year earlier.
Of the total FDI net inflows during the period, $189.03 million or 2.09% came from Japan, up from $14.79 million or 0.16% in 2017.
A day before the Osaka leg of the PEB in Japan, state economic managers and other Cabinet members met with Japanese officials during the 7th Philippines-Japan High Level Joint Committee Meeting on Infrastructure Development and Economic Cooperation, the Department of Budget and Management said in a separate statement.
The officials discussed infrastructure cooperation, socio-economic issues and the peace process in Mindanao as well as sectorial cooperation. — Karl Angelo N. Vidal