FOR trade experts, it is critical for the Philippines to embark on investment facilitation as a “further step” beyond investment promotion, with the goal of retaining investors and encouraging them to expand or reinvest in the country.
In a statement released by Philippine Exporters Confederation Inc. (Philexport) on Friday, Board of Investments (BOI)-Industry Development Services’ executive director Corazon Halili-Dichosa, in her opening remarks at a recent webinar on creating a conducive environment for investments, said the country recognizes the “dynamic link” between investment facilitation as well as trade and industry development.
Dichosa underscored that aside from merely luring investments, it is important that the country “facilitates” the flow of foreign direct investments (FDI).
“We need investments to create and develop industries that can trade either in the local or export markets,” the BOI official said. “Further, FDIs can provide the technologies to enhance industry competitiveness and market access…enable greater global value chain participation, and generate more foreign exchange. Thus, it is critical that we facilitate the flow of and realize the gains from FDIs.”
The Philippines has already taken steps to strengthen its investment framework and facilitate investment inflows through legislative reforms such as the Foreign Investment Act, Retail Trade Liberalization Law, and Public Service Act, as well as various “promotional campaigns,” Philexport said.
However, the umbrella organization of exporters maintained that such efforts must be completed with measures that will “further facilitate” and ease the process of setting up and operating in the country.
“Strengthening the investment framework should not just end at investment promotion, but extend to ensuring incoming investments can function smoothly throughout their [lifespans],” Philexport added.
Meanwhile, Rodrigo Polanco, a senior lecturer, researcher and academic coordinator at the World Trade Institute in the University of Bern, underscored in his online presentation the importance of investment facilitation for the Philippines.
According to Philexport, Polanco said facilitation supports investments beyond the investment attraction phase and “improves retention,” then added that it “can enhance the visibility of domestic firms to foreign investors looking for local partners through such activities as business matchmaking.”
Moreover, investment facilitation promotes “greater transparency” of regulation and streamlining of procedures for investment, which the export group said “is very useful for small and medium-sized enterprises (SMEs).”
Polanco stressed that facilitation helps SMEs in particular to overcome barriers and bureaucracy to investing. He said “the more you make regulations accessible to SMEs, the more chances that [they] can participate in investment activities.”
Investment facilitation, according to him, involves a set of measures to improve the transparency and predictability of investment frameworks, streamline procedures for foreign investors, enhance coordination and cooperation, and identify potential issues early to avoid investment grievances.
Meanwhile, Philexport also cited the Organisation for Economic Co-operation and Development (OECD), noting that facilitation makes it easy for investors to establish or expand their existing investments.
Further, the OECD sees investment facilitation as including both pre-establishment and investment retention.
The former, according to the global policy forum, pertains to the need to provide an investor interested in a specific location or in reinvesting with a transparent, predictable, as well as an efficient regulatory and administrative framework, while maintaining investment benefits.
Investment retention, on the other hand, is keeping investors satisfied through the quality, transparency, consistency and predictability of the investment policy framework.
It is also worth noting that there is a “secret” to a successful investment facilitation campaign, as Polanco added: “Even though many investment-promotion agencies are key investment-facilitation players, the issue goes beyond the work of IPAs…a ‘whole-of-government’ approach is needed.”