Despite being the “Poster Boy” in Asian GDP growth, the Philippines ironically appears to be the least attractive Asean member in drawing foreign direct investments. What gives?
With the Aquino administration facing its final curtain, initiatives to attract foreign investments by relaxing ownership restrictions in certain industries are flying thick and fast. A charter change to liberalize foreign ownership generally got a lukewarm reception from Aquino’s economic managers.
Let us look at land, education, the media and mining, for starters.
We are for foreign ownership of land. Because, regardless of ownership, land is something one cannot ever take out of the country.
As long as there are reasonable caps on the repatriation of dividends of fully owned foreign real estate companies, the country should be alright. It is true that an influx of foreign funds could raise prices of Philippine real-estate. But wouldn’t we want our real estate properties to be comparably valued flowing the global standards of land valuation?
Besides, the resulting higher real-estate taxes could be a definitive source of funding for more government services.
Bringing in fully owned foreign educational institutions looks like a no brainer. We should welcome them, especially the technology and science-based learning institutions.
On the issue of foreign media, they should also be allowed liberal entry. Let’s face it—many of the huge media institutions here are owned by persons with other business interests or linked to influential or elite economic and political personalities. And ownership usually dictates what happens at the media studios or newsrooms.
They may not necessarily serve public interest before their parochial concerns. But we would rather see “a thousand flowers bloom,” so to speak. The fear of possible infiltration of “foreign bias” into the newsrooms can easily be countered by a discerning public who can tell news from propaganda. We are not fearful of such risk because we trust the maturity of the Filipino audience.
However, we would like to disabuse the minds of some that allowing foreign media here would result in hundreds of new jobs for Filipinos. Absolutely not. There would likely be more expatriates on the senior-management level since world-wide automation had resulted in media cutting manpower needs. This should, therefore, not be used as the main argument for foreign ownership of media.
As for mining, this remains a contentious area because of environmental concerns. However, given the findings that the Philippines is now one of the most resource-rich (land and sea) nation on Earth, it would be a shame if we do not tap foreign money to develop our resources. Local capital would never be enough to fully tap the vast resources that we have.
As new National Economic and Development Authority Director General Ernesto Pernia had said, government must be able to get more share from the fruits of mining than currently allowed. They should also be legislated to obligatorily provide educational and health welfare services to the locals in areas they will set camps and give top job priority to residents within a 30-kilometer radius from the mining site. Stating the obvious, no environmental violation must be allowed. Instead, they should be required to reforest or replenish what is being unnecessarily prejudiced of our natural assets because of their mining activities.
Foreigners, we are certain, welcome the prevalent “industrial peace” enjoyed during the Aquino administration. The DOLE has been able to do the necessary out of court arbitration of most labor-management disputes in the last six years.
The biggest issue, however, remains the high power cost here, considered one of the highest in the world. In most of Asia, governments do subsidize power rates and surrender some fiscal loss in favor of attracting more investments that create jobs and help combat poverty. That choice must be made by the Duterte administration if it wants to attract more foreign investors.
Consider that most businesses trace from 15 percent to 40 percent of their cost of operations to power expenditures. Thailand’s power rate is a fifth of our current rate, and Indonesia charges half of ours. How can we compete?
It is not just the cost but the sufficiency of supply that’s holding us. A power supply gap is still projected based on currently applied for new power sources.
Then there is the ease of doing business. We hope it is not true that it takes 60 signatures to get a power application approved. If this is true, a lot of spadework has to be done because getting those foreign investors is absolutely needed to fill the vacuum of development funds needed by our relatively capital-starved nation.
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Bingo Dejaresco, former banker, is a financial consultant, media practitioner and political strategist. A life member of Finex, his views are his personally and do not necessarily reflect those of FINEX. dejarescobingo@yahoo.com