Europe-PH News

THE GOVERNMENT should take steps to arrest the fall in net foreign direct investments (FDI) -- which were nearly halved last semester from a year ago -- and prod some improvement by yearend, the Joint Foreign Chambers of the Philippines said in a statement sent to media yesterday.

The chamber said “actions that can be taken in the months ahead that will improve investor confidence” include:

• enacting proposed amendments to the Foreign Investment Negative List to make it less restrictive, changes to the Build-Operate-Transfer and Right-of-Way laws to speed up implementation of major infrastructure projects, the proposed Customs Modernization and Tariffs Act, Freedom of Information Act and the formation of a Department of Information and Communications Technology -- a proposal to which the current administration has been lukewarm;

• expression of support by presidential candidates for policies that will enhance foreign investor confidence particularly in participating in infrastructure development, open the economy further, as well as reduce business costs, red tape and corruption;

• “show progress” in joining foreign trade and investment pacts with the European Union, as well as the Trans-Pacific Partnership for which an agreement had been forged last Monday;

• alleviate Metro Manila’s traffic congestion;

• “avoid recurrence of port congestion caused by truck bans”;

• reduce flight delays at the Ninoy Aquino International Airport and increase flights at Clark International Airport;

• avoid outages during the dry season next year that will be aggravated by a strong El Niño episode that could last till July;

• ensure timely processing of value-added tax refunds for eligible companies;

• award more public-private partnership infrastructure deals and accelerate project implementation; and

• continue improvement in major international competitiveness ratings in which the country has been advancing since 2010.

Sought for further comment, John D. Forbes, senior adviser of the American Chamber of Commerce of the Philippines, said some of the recommendations can be acted on in the short term. “We are optimistic the port congestion issue will not recur so long as the movement of trucks in and out of the port is more efficient with the appointment system and seven-days-a-week services at the port,” Mr. Forbes said. “There are also signs that the MRT (Metro Rail Transit) will have better service and some initial actions to improve traffic on EDSA.”

Latest official data show:

• net FDI -- tracked by the central bank -- fell by 40.1% to $2.019 billion last semester from the $3.373 billion logged in 2014’s comparable six months, while

• FDI commitments registered with six state promotion bodies -- Board of Investments (BoI), Clark Development Corp., Philippine Economic Zone Authority, Subic Bay Metropolitan Authority, Authority of the Freeport Area of Bataan, BoI-Autonomous Region in Muslim Mindanao and Cagayan Economic Zone Authority -- dropped 21% to P58.0 billion from P73.4 billion in the same comparative periods, signaling a continued reduction in actual inflows in the succeeding months.

The country’s net FDI intake last semester was lower than even just the first-quarter tally of its peers. Latest available central bank data showed that Singapore got $16.88 billion in the first quarter; Indonesia received $5.293 billion; Thailand, $5.104 billion; and Malaysia, $2.368 billion.

The central bank still officially expects net FDI inflows to reach $6 billion this year, up from the initial estimate of $5.3 billion tipped last November, even as private sector analysts expect investors to stay on the sidelines until the new administration that assumes office on June 30 next year demonstrates continued commitment to reforms and investment-friendly policies.

Net FDI surged 65.9% to a record $6.201 billion last year from $3.737 billion in 2013, beyond the central bank’s upwardly revised $4.4-billion forecast for 2014.

Source: BusinessWorld