Although foreign investors have expressed their desire to put up hard investments in the Philippines, the country is just not ready for it.
This was the sentiment shared by experts in academe and private sector in the recent ADR Institute discussion on the role of exports and foreign direct investments (FDI) in the country’s development in Makati City.
The think tank, which specializes in strategic and international studies, described the country as “half-open” for investment inflows, particularly from foreign players.
“The limits set by the country’s Constitution on foreign equity in real estate and in key industries have set up a half-open and restrictive business environment that has frustrated the influx of much-needed FDI,” ADR Institute said.
It added that if the Philippines is to promote itself as an investment destination, the country must bring its regulations to global standards. And relaxing the foreign-ownership rule is key among these.
“We really are not friendly to foreign investors,” University of the Philippines School of Economics Prof. Ramon Clarete said, citing instances of confusing and incoherent government regulations.
He also said the country’s corporate income-tax rate is the highest in the region.
“We hear the market [players] always say the tax rates in the Philippines are not competitive,” said Clarete, one of the discussants in the forum.
Likewise, Philippine Institute for Development Studies President Gilbert Llanto said that even though incentives and special pocket areas for development are being built in the country to attract FDI, foreign investors are still hesitant, as the majority of the human-resource pool are still in Metro Manila, which is—as described by some experts—already heavily congested.
“This country knows what needs to be done. We just have to do it,” SGV & Co. Head of Tax and General Counsel Wilfredo Villanueva said.
The Bangko Sentral ng Pilipinas reported earlier that April FDI inflows declined by 43 percent compared to the same period in 2014.