Socioeconomic Planning Secretary Ernesto M. Pernia confirmed moves to revise the country’s procurement law to allow more foreign contractors to participate in key state projects, with the changes to be reflected immediately in the new Regular Foreign Investment Negative List (RFINL).
Also to be liberalized further via the RFINL that is now being finalized by the National Economic and Development Authority (Neda), according to Pernia, is the retail sector.
“It will make them [local construction and retail firms] more competitive; they’ll be pressured to be internationally competitive,” Pernia told reporters on the sidelines of the launch of the 28th National Statistics Month on Monday.
Pernia said the government’s efforts to open up the construction sector is linked to the ongoing revisions in the procurement law.
The Neda secretary said the government wants to allow more international construction companies and contractors to operate in the country. This is one of the issues on the procurement act that were raised by the Asian Development Bank (ADB) and World Bank, which are currently working with the government in revising the law.
The ADB said allowing foreign companies and contractors through international competitive bidding (ICB) can speed up and improve the implementation of the government’s massive infrastructure program. NCBs are particularly used for contracts for small projects, such as farm-to-market roads, school buildings, community hospitals and health centers.
The World Bank explained that while ICB and NCB are both open and transparent procurement processes, ICB requires advertising the procurements internationally and nationally, whereas NCB requires national advertising only.
Meanwhile, Pernia said the government is looking at bringing down the capitalization needed by foreign retailers in setting up shop in the Philippines.
Pernia said the level will be brought down to $200,000 under the revised RFINL.
“In general, we’re trying to liberalize the [R]FINL,” Pernia told reporters. “The purpose is to make the consumers happier.
The Neda is tasked to review and revise the country’s RFINL, which contains restrictions on foreign investments and the practice of professions based on the Constitution and Philippine laws.
The RFINL contains investment areas/activities where foreign equity participation is limited by mandate of the Constitution and specific laws. It also consists of investment areas/activities where foreign equity participation is limited for reasons of defense, security, risk to public health and morals, and protection of small- and medium-sized domestic market enterprises.
The amendment of the list is headed by the Neda Secretariat, as provided for under Section 8 of RA 7042, or the Foreign Investments Act of 1991, which states that amendments may be made upon the recommendation of the secretary of national defense or the secretary of health, or the secretary of education, endorsed by the Neda, approved by the President, and promulgated by a Presidential Proclamation.