ON the 75th anniversary of the diplomatic relations between the United Kingdom and the Philippines, we reflect on the way more international trade and investments can serve as key tools to support economic recovery, and to build back better.
It has been more than a year since the pandemic took hold and posed enormous challenges to our prosperity globally. It hit the Philippine economy hard. This is partly because it is highly dependent on domestic consumption. Growth needs Filipinos to be able to go out and spend their disposable income. Over the last year, however, their ability to do so has been limited by necessary health restrictions, as well as the pandemic’s impact on factors such as employment and remittances.
Last week the Philippine government released its latest report on the economy. After the worst recession the country has seen in recent history, there is some cause for hope. While there was still a gross domestic product contraction of 4.2 percent, this was less pronounced than in previous quarters. With the continuous arrival of safe and effective vaccines in the coming months (including that of Oxford-AstraZeneca), there is hope that things will continue to improve. But after such a difficult time, it is key to do everything possible to help the economy.
With this in mind, the British Embassy and the British Chamber of Commerce Phils. welcome the government’s recent policy actions to provide fiscal relief for local businesses and foreign investors affected by the pandemic, and to support the recovery. A landmark reform—Republic Act 11534, or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act that was signed in March 2021—lowered corporate income-tax rates, which had long been the highest in Southeast Asia. This will stimulate more business investments and create many more jobs.
A few weeks ago His Excellency President Rodrigo Duterte certified as urgent the enactment of three pending economic bills which would further encourage more foreign businesses to invest in the Philippines. Members of Congress are now reviewing Senate Bill (SB) 2094, which aims to amend the Public Service Act, and SB 1156 which proposes amendments to the Foreign Investment Act.
Last week the Senate voted unanimously to amend some provisions of the Retail Trade Liberalization Act, bringing it a few steps closer to enactment. It is essential that the final version of the bill will keep barriers to foreign investment as low as possible.
The British Embassy and the British Chamber strongly support these measures. Together, they will make it easier to attract foreign direct investment into the country by increasing the openness of the economy. Advancing dynamism and flexibility in investment procedures in key sectors, while improving transparency and ease of doing business, will make the Philippines more competitive, regionally and globally. This, in turn, can promote competitiveness and ensure quality and affordably priced goods and services for consumers.
The UK is an important investor and trading partner of the Philippines, and we place high priority on further expanding these links this year, as we celebrate another milestone in UK-Philippines bilateral relations: our 75th anniversary. We continue to encourage more British companies to look at the business opportunities in this country.
Already, several UK brands have established a strong reputation in key sectors of the economy: in pharmaceuticals, banking and finance, construction and engineering, energy, manufacturing and distribution, as well as retail. But there are plenty more British companies interested in investment opportunities—including in the food and drink, advanced engineering and manufacturing and business-services industries—if the right business environment is in place. These economic measures would help.
The UK’s Prosperity Programmes support the Philippines in the areas of health, education, low-carbon energy, infrastructure, intellectual property, digital economy, finance, and business environment. We worked closely with the Anti-Red Tape Authority and provided capacity building and technical advice around the implementation of the Ease of Doing Business Act.
And last year the Philippine government, with support from the UK’s Investment Promotion Programme, launched the “Make It Happen in the Philippines” campaign. With these additional economic reform measures, we believe this message will resonate even more strongly to global investors.
As the British Embassy and the British Chamber help cement the 75-year UK-Philippines friendship, we look forward to continuing to work with our partners and friends to encourage greater trade, investment and cooperation between our countries.