ASEAN action on FDI highlights urgency of reform for Philippines

Economy

Posted on March 20, 2016 08:47:00 PM

By Victor V. Saulon


MEMBERS of the Association of Southeast Asian Nations (ASEAN) have in recent months introduced policy measures aimed at facilitating the entry of foreign direct investment (FDI), highlighting the need for the Philippines to hurry along its programs to enhance competitiveness.

“Clearly, the Philippines is falling more behind the other destinations of FDIs,” said Bernardo M. Villegas, professor at the University of Asia and the Pacific.

He was reacting to a report by the United Nations Conference on Trade and Development (UNCTAD) that says Asian countries took the lead in adopting investment policy measures that are mostly geared towards further opening up their economies.

ECCP President Guenter Taus pointed out that 14 of the policy measures took place in ASEAN countries.

“These findings underline once again how important it is for the Philippines to move fast in order to make the business environment more attractive to FDI and remain competitive in an increasingly integrated ASEAN economy,” he said.

“It is about putting in place policy measures that will improve entry conditions, such as opening up key economic activities to full foreign ownership, but also taking the necessary steps to make doing business on the ground easier,” he added.

The report cited Indonesia’s launch of a comprehensive plan for a liberalization policy on foreign investment in 35 industries, including tourism and the film industry. While it introduced investment restrictions in 19 business lines, it also allowed foreigners to own houses in Indonesia for up to 80 years, up from the previous 50 years.

Indonesia also introduced a three-hour licensing process for certain categories of investors planning to open businesses.

“I believe that these are the kind of changes we need to see in the Philippines to remove excessive the red tape and make doing business and, consequently, attracting FDI easier,” Mr. Taus said.

Other ASEAN countries highlighted by the UNCTAD report include Myanmar, which adopted a new investment law, replacing and consolidating previous legislation, and paving the way for speedier investment approvals.

“The country also passed a new Mines law which provides a more favorable environment for foreign investment. It also allowed foreigners to set up joint ventures for trading in farming and medical products,” the report said.

Myanmar also enacted a new arbitration law providing a comprehensive legal framework for the conduct of domestic and international arbitration.

Vietnam allowed foreign investors to purchase rights to manage airports and provide some ground services to a certain degree. It also eased investment registration procedures.

Mr. Villegas reiterated his stand for the country to take a more decisive move. “We must amend the Constitution,” he said.

ASEAN is comprised of Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

The UNCTAD report said a total of 25 countries or economies took 41 investment policy measures from October 2015 to February 2016.

The share of liberalization and promotion measures reached 85% -- broadly in line with the recent years’ average, UNCTAD said. “These policy measures show a continued move towards improving entry conditions, reducing restrictions and facilitating foreign investment,” it said.

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