The chairman of the House Committee on Economic Affairs on Monday said the Philippines is now attracting a “good” kind of attention from investors who were previously hesitant to invest in the country.
Rep. Sharon Garin of AAMBIS-OWA Party list, in a news statement, said an open Philippine economy is now catching the eyes of many international investors because of new policies recently enacted, while numerous business groups have expressed enthusiasm for the game changing provisions of the Foreign Investments Act and New Public Service Act.
According to Garin, one of the principal authors of the laws, both local and foreign investors hailed the signing into law of the New PSA and the FIA by President Duterte last March.
“Finally, after a century of restrictions, we now have relevant laws to help which encourages long-term investments in underutilized public sectors such telecommunications, shipping, air carriers, railways, and subways,” said Garin.
“It’s an exciting new era for our economy especially as we struggled from the past two years of economic shutdown due to the pandemic. We have heard from Elon Musk’s Starlink, which will hopefully make Internet better and more accessible all over the country. Their low-orbit satellite technology can bring Internet access to remote areas which are previously underserved or unserved by traditional connectivity,” she said.
She said Swiss Ambassador to the Philippines Alain Gaschen has also revealed that there are Swiss companies planning to set up operations in the country.
Garin added that the Australian Ambassador to the Philippines, Steven Robinson, as well as the European Chamber of Commerce in the Philippines officials, have noted that the liberalization of some business would usher in more foreign funds and spur economic growth.
“I can go on, but the list of excited potential investors is long. What is clear to me is that by making our economic policies relevant, we are now seeing a renewed interest in revitalizing our economy from many sectors,” she said.
“Remember, increased competition will generate higher quality of service and competitive pricing for consumers. Better services but lower prices will be our goal without sacrificing our local businesses and the consumers. We have put safeguards such as penalties for erring companies offering public services, and we have established a stringent set of requirements for vulnerable sectors and vetting of all potential investors,” Garin said.
Based on estimates, the lady lawmaker said the passage of these laws would increase the Philippines foreign direct investments (FDI) by around P299 billion over the next five years. It is also expected to increase the gross domestic product (GDP) growth rate by 0.47 percentage points above the baseline.
The Foreign Investments Act of 1991 is the law that regulates foreign investments in the Philippines. While the former law allowed foreign investors to invest up to 100 percent equity in domestic market enterprises, it also set many restrictions that limited the options for many investors. In connection, the Philippines has been ranked as the third most restrictive economy in the world based on the 2020 Organization for Economic Cooperation and Development (OECD) report.
“There is a great need for economic and technology exchange in our country. We have been lagging behind some of our Asean neighbors and are further hampered by the economic shutdowns during the community quarantines. An inflow of capital and better technology is a great step towards reviving our economy,” Garin added.
The Public Service Act amendments, meanwhile, modified an 85-year-old law to change the legal definition of “public services” and those that are blanketed by the category of the “public utilities” industry. The law now limits public utility to distribution and transmission of electricity, petroleum and petroleum products transmission, water distribution and wastewater systems, seaports, and public utility vehicles. Under the new measure, the 40 percent cap on foreign equity ownership is lifted from public services not classified as public utility.