EUROPEAN investors have pressed legislators to prioritize the passage of measures lifting foreign ownership restrictions to net some of the multinationals relocating to Southeast Asia in the time of Covid-19.
The European Chamber of Commerce of the Philippines (ECCP) on Friday called on lawmakers to pass legislation opening several sectors of the economy to foreign players. ECCP President Nabil Francis said now is the right time for the government to make such a move to pull investors to the Philippines.
As firms whose supply chains were distorted by the Covid-19 pandemic scan Southeast Asia for business locations, liberalizing the Philippine economy will improve the country’s chances at securing the investments that are moving to the region, Francis argued.
The Philippines, he explained, stands to benefit from this capital flight, but policy-makers have to reform the investment regime to the tune of liberalization. He then stated the ECCP’s appeal to pass amendments to the 84-year-old Public Services Act, Foreign Investments Act of 1991 and the Retail Trade Liberalization Act of 2000.
“With this, we welcome and support the administration’s pronouncements to include significant policy measures in its priority legislations, namely, the amendments to the Public Services Act, the Foreign Investments Act and Retail Trade Liberalization Act,” Francis said at the opening of the 2020 European-Philippine Business Summit.
Revising the Public Services Act will define what public utilities are. Foreigners are barred from owning these under Article XII, Section 11 of the Constitution. Consequently. The amended PSA will define what industries fall outside the coverage of public utilities, such as telecommunications, so these can soon be operated by foreign investors.
On the other hand, amending the Foreign Investments Act will exclude practice of professions from the negative list and cut the required number of local hires in foreign firms to 15, from 50, to entice workers and multinationals abroad to move here.
Changing the Retail Trade Liberalization Act will bring down the capital requirement for foreign retailers to $200,000. At present, only those with a minimum paid-up capital of $2.5 million and above may be owned in full by foreigners.
The House of Representatives passed its version of the amendment bills prior to the pandemic, leaving the fate of the measures at the hands of the Senate.
To dispel uncertainties, Francis asked the government to wrap up deliberations on the proposal to rationalize fiscal incentives. Policy-makers have yet to reach a consensus on whether to carry on with the administration’s plan to trim corporate income tax to 25 percent, from 30 percent, but in exchange strip exporters of their tax perks.
“The Philippines has to pull away from the catch-up game with its neighbors in the region and move swiftly,” the ECCP chief insisted.
Keeping the investment laws as is could be catastrophic for the Philippines. Citing a survey by the ECCP and the European Union Delegation, Francis said 71.5 percent of European investors in the country may postpone or terminate altogether business plans here, as most of them said the pandemic and the lockdowns impaired their operations.
By Elijah Felice Rosales
Source: Business Mirror
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