More foreign investments 'key' to RP recovery
By Karen Flores, abs-cbnNEWS.com | 06/01/2009 7:04 PM
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The Joint Foreign Chambers of the Philippines (JFC) has identified foreign direct investments (FDI) as a key driver for the country's recovery from the economic crisis.
In a press conference on Monday, the seven-member chamber laid out concrete steps to improve the country's business environment. These, JFC said, will attract more foreign investors, creating more revenues and jobs for Filipinos.
Such measures include the reduction of barriers to foreign participation, more forceful action against corruption and smuggling, the creation of more modern infrastructure, and improvements in the country's education system, among others.
"As foreign investors and employers, we fully share the ambition of Filipinos for the country to become an advanced economy in the decades ahead. Our members are prepared to invest continuously and heavily and to create millions of new jobs, but only if the nation can create a better business climate which will enable future prosperity," the group said in its report.
The Philippines has not been very lucky in closing investment deals with foreigners, getting only $16 million in FDI inflows for the month of February.
The amount was only $4 million higher than what boxing champ Manny Pacquiao reportedly earned from his recent bout with British opponent Ricky Hatton, excluding pay-per-view earnings.
The JFC is composed of the American Chamber of Commerce of the Philippines, the Australian-New Zealand Chamber of Commerce (Philippines), the Canadian Chamber of Commerce of the Philippines, the European Chamber of Commerce of the Philippines, the Japanese Chamber of Commerce and Industry of the Philippines, the Korean Chamber of Commerce of the Philippines, and the Philippine Association of Multinational Companies.
Additions and improvements
To make the Philippines more attractive to foreign businessmen, JFC called on the government to improve its infrastructure and education system.
The group cited the country's lack of toll roads and rail lines, saying that over ten major government projects have not been implemented this year.
"The thrust to modernize infrastructure must accelerate. In 2008, only slightly above 2 percent of GDP (gross domestic product) was devoted to public infrastructure, while per capita spending on social infrastructure for education and health is extremely low," the group said.
More importantly, JFC said the government should ensure an adequate supply of basic utilities such as electricity and water, as investors also take these into account in putting up a business.
"(The Philippines) needs new plants to keep the lights on," said Chris Ward, Vice President of the Australian-New Zealand Chamber of Commerce (Philippines).
JFC also stressed the need for the country to catch up with its neighbors regarding its education system, saying that the government should invest more on physical school facilities and better educational materials.
"Rapid economic progress is not possible without a well-educated workforce. We support a massive increase in the education budget and extending basic education by two years from the current 10 years, one of the shortest in the world," JFC said.
"Students entering the workforce have weak english, math, science, logic, and technical skills, which must be improved to meet the requirements of a modernizing economy," the group added.
Develop potential 'winning' sectors
According to JFC, the Philippines has several sectors which offer great potential to create millions of new jobs and billions of dollars of direct and indirect revenues.
These, they said, include the agri-industrial sector, the business process outsourcing sector, creative industries (film, design, music), infrastructure and logistics, manufacturing, mining, and tourism.
"The next two years will be an ideal time to introduce reforms to accelerate the growth of these seven sectors," JFC said.
JFC said Congress should improve the country's labor laws to provide more rights and benefits for workers from these sectors. The group also stressed the need for government to conduct training programs to improve the skill sets of Filipinos, making them more employable.
"Filipinos deserves better. The government should promote the Philippines more," JFC said.
Remove major setbacks
As there are potential growth areas for the Philippines which need to be developed, JFC said there are a number of things that the government should let go if it wants to speed up economic growth.
In particular, the group called on government to reduce barriers to foreign participation, saying that such hinder the country from striking bigger investment deals.
"Progress in reducing barriers to foreign participation would send the message that the Philippines is serious in its stated intention to enter into free trade negotiations with the European Union as well as the United States," JFC said.
JFC said the government should consider allowing ownership of land by foreign investors who create jobs, as well as permitting foreign retirees to reside in the Philippines. These, the group said, will "send an excellent signal."
"Unless future radical policy change turns the Philippines more inward, the country will maintain vital links to the global economy and will benefit from becoming more interconnected," JFC said.
Aside from this, JFC also urged the government to take forceful and effective actions against corruption as this continues to deprive the country of investments and foreign assistance.
"For decades, extensive local media coverage of Congressional and other investigations, rarely leading to trials and sentencing of corrupt officials, has led to the consistent classification of the Philippine government among the most corrupt in Asia," JFC said.
"Regulatory, judicial, and policy risks, can deter investors. Large-scale smuggling undermines investment, depriving the government of much-needed revenue. Tens of billions of dollars of foreign investment have bypassed the Philippines as a result," it added.
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