The government should have put in place a more liberal investment policy allowing greater foreign ownership in particular sectors over the next 12 months, the Department of Finance said last Friday.
Finance Secretary Carlos G. Dominguez III himself made this assurance before potential investors while in Japan recently, consistent with an earlier commitment by President Duterte to open up the economy to more long-term, job-generating foreign direct investments (FDI).
While in Japan, Dominguez said the government is reviewing its foreign investment negative list (FINL) with the goal of lifting foreign-ownership limits in the area of construction, among other sectors.
There are two ways the Philippines will open up our economy to more foreign investments.
According to Dominguez, the first is the review of the FINL that began in May this year and the second is through an amendment of the Constitution with the help of Congress.
“A window opened for us to review that list. We are currently reviewing it with the idea of removing areas, such as construction and other areas to foreign investments,” he said.
“The President has called for a revision of our constitution, which we believe will start probably next year or in about 12 months,” he added.
Except for land, Dominguez earlier said he favors lifting the foreign ownership limits for certain sectors to generate more foreign investments.
Based on data from the 2016 Asean Investment Report, the Philippines continue to lag behind most in the Asean in FDI inflows.
The report shows the Philippines with net FDI inflows of $5.724 billion in 2015, representing only 4.7 percent of total net FDI inflows of $120.818 billion in the region.
Singapore accounted for half of the net inflows in the same year with $61.284 billion, followed by Indonesia with $16.916 billion, or 14 percent of the total net inflow; Vietnam with $11.8 billion, or 9.8 percent; Malaysia with $11.289 billion, or 9.3 percent; and Thailand with $8.027, or 6.6 percent of the total.
In September Socioeconomic Planning Secretary Ernesto M. Pernia said the government would adopt a more aggressive stance when streamlining the country’s regular foreign investment negative list.
Pernia added the Philippines may allow 100-percent foreign ownership in certain sectors, such as public utilities, the media and the practice of professions, such as teaching.
As for concerns about the Philippine peso, Dominguez said the unique characteristics of the economy fueled by remittances from its overseas workers and a strong business-process outsourcing (BPO) industry and exports sector, make a slightly depreciated local currency beneficial for the country.
“The peso exchange rate is a tool; if it helps the economy, it performs. Now, when the peso is slightly weak, it certainly helps our economy,” Dominguez said.
According to Dominguez a slightly depreciated peso makes the country’s exports more competitive, pulls down costs for the BPO sector and benefits the families of overseas Filipino workers.