PRIVATE-sector leaders are asking President Duterte to follow through on his directive to liberalize key economic sectors, such as public services and retail trade, in his State of the Nation Address (Sona) on Monday.
Business leaders polled by the BusinessMirror said they are hoping the President will instruct his Cabinet members and request lawmakers in his Sona to carry out measures that will ease, if not lift, restrictions on foreign participation. They also want Duterte to side with the business sector in its tug of war on contractualization with labor groups.
Florian Gottein, executive director of the European Chamber of Commerce of the Philippines (ECCP), said European firms are banking on the President to push for the liberalization of public services and retail trade, among others, as laid out in Memorandum Order (MO) 16.
“ECCP looks forward to the follow-through of the President’s Memorandum Order 16 of 2017. The said MO seeks to lift or ease restrictions on foreign participation in areas such as public services, retail trade and construction of locally funded public works,” Gottein said.
“Such reform will encourage further foreign investments and, consequently, spur economic growth and increase jobs,” he added.
In 2017 Duterte issued MO 16 directing the National Economic and Development Authority Board to take steps to relax or eliminate foreign equity caps on eight investment areas.
These sectors are private recruitment; practice of particular professions; contracts for the construction and repair of locally funded public works; and public services.
They also include the culture, production, milling, processing and trading of rice and corn; teaching at higher education levels; retail trade; and domestic market enterprises.
As such, government economists were tasked to coordinate with lawmakers in the legislation of bills liberalizing the eight investment areas. The Chief Executive argued that opening up key economic sectors to foreign players would raise the country’s level of competitiveness.
American Chamber of Commerce of the Philippines senior advisor John D. Forbes is also expecting the President to announce in his Sona the administration’s economic strategy for its second and final half in power.
“I believe [foreign chambers] would welcome a section that announces plans to make the Philippines more attractive to foreign investors. We live in a period of unprecedented inflows of foreign investments in Southeast Asia, and governments in Indonesia and Vietnam are making reforms in fiscal, labor and infrastructure policies and programs to make their economies very competitive,” Forbes said.
“We hope the second half of this administration can [implement] policies to catch up with neighbors in the areas of exports, investments and job creation,” he added.
Last year the Philippines received $9.8 billion in foreign direct investment inflows, according to Central Bank data. This was lower than those directed to Southeast Asian competitors Singapore with $81.85 billion, Indonesia with $20.17 billion and Thailand with $12.46 billion.
Philippine Chamber of Commerce and Industry President Maria Alegria Sibal-Limjoco said Duterte should once and for all turn down in his Sona the lobby efforts to sign the security of tenure (SOT) bill and the shift to federalism.
“[The] economy is doing well, business confidence is high and investors are coming in. These issues, federalism and the SOT bill, may set us back again,” Limjoco said.
In a letter dated July 1, local and foreign business groups asked the President to veto the SOT bill, which they claim is redundant given the issuance of Executive Order (EO) 51 and Department Order (DO) 174 of the labor department.
They said EO 51 and DO 174 already prohibited the end-of-contract scheme, popularly known as Endo; therefore, the SOT bill is “superfluous.” Endo is the practice of hiring and terminating workers after every five months to circumvent their regularization.
Last year the government made a push to shift to a federal system, but could only go as far as a draft constitution due to opposition from the business sector and warning from the economic team of its costly impact on the economy.
The cost of federalizing the Philippines was estimated at a range of P72 billion to P130 billion, according to government computations. Fiscal deficit could hit 6.7 percent of GDP, way beyond the 3-percent target of economic managers—a limit they said is also observed by European Union member-states.
Image credits: Nonie Reyes