Tuesday, 2 June 2009

Global downturn an opportunity for the Philippines

THE GOVERNMENT should take advantage of the ongoing downturn to enact reforms that will position the country as a prime investment destination once the global economy recovers, foreign business leaders said in a policy paper released yesterday.

The Joint Foreign Chambers’ paper, which lists prescriptions for "preparing to rebuild foreign investment inflows", has been submitted to President Gloria Macapagal Arroyo and key state agencies. It also seeks to guide policymakers of the next administration, officials said.

The recommendations include an emphasis on reform instead of resiliency in economic strategies; a call for the immediate passage of key bills and construction of infrastructure especially in Luzon; and that the business climate be improved by easing foreign investment laws, addressing corruption, and upgrading education.

"We believe the foreign investment community can invest tens of billions of dollars more and create many millions of new jobs ... but this will only happen once the world economy is back on track and if the investment climate in the Philippines is attractive enough in comparison to alternative competing economies," European Chamber of Commerce of the Philippines, Inc. President Hubert D’Aboville said at the presentation of the 14-page document.

The paper states that direct investments to the Philippines only accounted for 3% of a $51.1-billion inflow into Southeast Asia.

"More work is needed and this is the best time to prepare," Mr. D’Aboville said.

The first of the eight-pronged approaches described involves a warning against complacency in undertaking reforms. A 10% growth by 2013 or 2014 should be attempted, the paper states.

"We encourage the President to share her proposals for rebooting in her forthcoming State of the Nation Address in July and encourage candidates for the presidency to include specific business and economic reform proposals in their platforms...

"[And] we suggest the government organize a Special Crisis Experts Group comprising of leading economists, businessmen and senior government leaders to recommend key reforms...," the paper continues.

It goes on to recommend that key bills be passed before the current Congress’ term ends. The list of priorities includes draft laws that seek to rationalize investment incentives, grant tax perks to real estate investment trusts (REIT), and harmonize the Philippines’ customs laws to international standards. Also tagged were the Freedom of Access to Information, Department of Information and Communication Technology Act, Pre-Need Code, and Residential Free Patent bills.

Asked to comment, House Speaker Prospero C. Nograles said in a text message that the REIT bill would likely be the only one to be finished by their branch of Congress.

The foreign chambers went on to reiterate previous calls to enjoin the private sector in the government’s review of foreign investment laws, and earlier recommendations on building more infrastructure, particularly those that will improve Luzon’s transportation networks.

"If they are already started, they would have a good chance of [continuing under the new administration]," American Chamber of Commerce of the Philippines, Inc. President Austen Chamberlain told BusinessWorld at the sidelines of the briefing.

Education must also be upgraded to make the workforce more competitive, while corruption should be diminished to attract investors.

"[And] in the months ahead, the Joint Foreign Chambers will consult with industry associations to identify and prioritize industry-specific reforms that will most accelerate growth in these ’Big Winner’ sectors," the paper states further, tagging agriculture, business process outsourcing, creative industries, infrastructure and logistics, manufacturing, mining and tourism as pivotal.

These recommendations will be reiterated to presidential candidates once they emerge, Mr. Chamberlain said.

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