FOREIGN investments in the country are mainly hampered by the Covid-19 pandemic, high costs of doing business and foreign equity restrictions, investment promotion agencies (IPAs) said.
Finance Assistant Secretary and Fiscal Incentives Review Board (FIRB) Head Juvy Danofrata said during the FIRB meeting last December 15 that investment promotion agencies identified these three as the main barriers to foreign investments in the country, among others.
On top of this, some IPAs observed that foreign investments are also hindered by the lack of basic utilities as well as quality Internet connectivity in the country, Danofrata said.
As instructed by the FIRB chairperson, the IPAs presented to the FIRB their investment promotion efforts, strategies, and leads and barriers to investments. The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law enacted last year mandated the FIRB to oversee the IPAs with regard to the grant of fiscal incentives.
In response, Finance Secretary Carlos G. Dominguez III, who chairs FIRB, said the top issues raised by the IPAs affirm the steps being taken by the government to promote job-generating investments in the country, including pushing for the passage of the priority economic liberalization bills.
“To address the restrictions to foreign equity, the Duterte administration has strongly supported the amendments to the Public Service Act, Retail Trade Liberalization Act, and Foreign Investment Act, which will responsibly open up our economy to more foreign investments that will benefit our people in the form of more quality jobs, products, and services. This, by the way, will also help investors and Filipino families have access to faster and more reliable Internet connection. That is why it is critical that we liberalize the telco industry,” he said.
In December, President Duterte signed Republic Act (RA) 11595 amending the two-decade-old Retail Trade Liberalization Act. The newly signed law lowered the required paid-up capital for foreign retail enterprises to P25 million from the previous $2.5 million (around P125 million) under the Retail Trade Liberalization Act of 2000 (RA 8762).
To further open up the economy, the Senate and the House of Representatives separately ratified in December last year the bicameral report on the bill amending the Foreign Investment Act of 1991.
As for the amendments to the 85-year-old Public Service Act, the measure is still pending in the bicameral conference committee.
Dominguez also said the government will continue to rapidly implement the Covid-19 vaccination program as well as the efforts to simplify government to achieve the ease of doing business.
Access to basic utilities will also be improved through the sustained implementation of the government’s Build, Build, Build infrastructure program, he added.
The Bangko Sentral ng Pilipinas reported earlier this month that the country’s foreign direct investments (FDI) in October surged by 98.9 percent year-on-year, bringing the country’s total 10-month FDI inflows above the $8-billion mark.
FDI to the country grew for the fifth consecutive month in October last year to hit $855 million from the $430 million in the same month in 2020.
The strong FDI performance in October brought the 10-month FDI of the country to $8.14 billion, up 48.1 percent from the January-to-October period in 2020.
Image credits: Nonoy Lacza