FOREIGN business chambers on Monday insisted it will take more than just presidential orders to liberalize the economy, as Congress has to do its part in legislating measures that will lift foreign ownership restrictions.
The Joint Foreign Chambers of the Philippines (JFC) said there is still much work to do in liberalizing the economy, even after President Duterte in October issued the 11th Foreign Investment Negative List (FINL). In a joint statement, the group branded the changes in the list as “minor.”
“The JFC welcome the 11th FINL promulgated in Executive Order 65 by President Rodrigo R. Duterte on October 31. However, we expect only modest gains in foreign direct investment [FDI] to result from the changes made in the new FINL,” the statement read.
“The list contains 11 changes from the previous lists, but most are minor. [Socioeconomic Planning Secretary Ernesto M.] Pernia described them as ‘marginal improvements’ and ‘baby steps,’” it added.
With this, the JFC enjoined lawmakers “to pass relevant laws, including amendments to the restrictions on foreign ownership in the Philippine Constitution.” Specific measures, it added, need to be prioritized if the government is truly serious in liberalizing investment activities.
“Without such reforms, the Philippines will continue to be rated by OECD [Organisation for Economic Co-operation and Development] as the most restrictive of 67 countries in its FDI restrictions,” the statement read.
4 measures
The four measures foreign businesses want Congress to prioritize are amendments to the:
■ 82-year-old Public Service Act;
■ Telecommunications Act;
■ Foreign Investments Act; and
■ Retail Trade Liberalization Act.
The JFC argued these bills will accelerate investments and allow competition, which, in turn, should improve public services.
House Bill (HB) 5828 amends the Public Service Act, and will redefine utilities, particularly excluding telecommunications. Article 12, Section 11 of the Constitution holds that public utilities must be solely operated by firms that are 60 percent owned by Filipinos.
Removing telecommunications from the strict definition of utilities will permit more players to enter the market and challenge the existing duopoly in the sector. The bill hurdled the House of Representatives September of last year and is now awaiting the Senate’s nod.
Reforms in the Telecommunications Act, on the other hand, should “allow improved and less expensive Internet services for all Filipinos,” the JFC argued.
HB 4067, authored by Rep. Arthur C. Yap of the Third District of Bohol, intends to amend the Foreign Investments Act by removing provisions on the practice of professions under the FINL. If enacted into law, there will no longer be restriction on foreigners practicing their professions here.
“This straightforward reform measure will encourage hundreds of new foreign investors investing a minimum of $100,000 and will simplify the FINL by removing the practice of professions from the [list]. The FINL is about investment and causes confusion by listing professions regulated by law,” the statement read.
Last, the JFC urged Congress to expedite amendments to the Retail Trade Liberalization Act. This reform will lift foreign equity and capitalization requirements under the law.
“Although the Philippines is a major consumer of imported goods, it tightly restricts foreign retailers. The new policy of the Duterte administration is to reduce the minimum capital requirement from $2.5 million to $200,000,” the statement read.
JFC member-chambers plan to discuss with the National Economic and Development Authority, Professional Regulation Commission, Presidential Legislative Liaison Office and leaders of Congress the measures they want prioritized. It argued that through liberalization, the country will rake in higher FDI.
The JFC is a coalition of the American, Australian and New Zealand, Canadian, European, Japanese and Korean business chambers, as well as the Philippine Association of Multinational Companies Regional Headquarters Inc.