FDI inflows are not dependent on foreign ownership of land - FPI

MANILA, Philippines – There is no need to allow foreigners to own land in the country to encourage more foreign direct investment (FDI), the Federation of Philippine Industries (FPI) said.

FPI president Jesus L. Arranza, noted that if foreign ownership of land is the real growth driver for investments, “then how come China and Vietnam are getting huge FDIs every year when there is no foreign land ownership in those countries?”

“So FPI does not buy the idea that in allowing foreign ownership of land, we will attract more FDIs. They may be prescribing the wrong medicine,” Arranza said in a statement.

He said what the country’s lawmakers and other advocates of moves to amend the Constitution for the purpose of allowing foreigners to own lands should focus on instead are efforts to make the country more business-friendly by coming up with policies and programs that would allow enterprises to become profitable.

“What we need to do is to create the atmosphere that would make businesses profitable. This includes stability in policies, better infrastructure, lower power rates, and peace and order, which are now being addressed by the government,” he said.

He warned that allowing foreigners to own land, especially if no restrictions are set, would lead to escalation of property prices “to the point that Filipinos, even the middle class, will not be able to afford it.”

However, should the initiative to amend the Constitution would prosper, Arranza said foreign ownership should only be allowed in lands where manufacturing plants are located.

For agribusiness, he said foreigners should not be allowed to own plantations but only the site where the processing plant is situated.

Through this, Arranza said the country would be able to harness its raw materials. Also, the domestic manufacturers will get the intermediate materials they need.

He said foreigners should not be allowed to own lands that would be used in establishing malls or for real estate development.

“We already have our own experts in these sectors in the likes of Ayala, SM and Robinsons, so there is no need to open them to foreigners,” he said.

At the same time, by limiting foreign ownership to the manufacturing sites, the real property market will not be disturbed much and Filipinos will be protected from escalation of land prices.

Earlier, the Management Association of the Philippines (MAP) said removing the restrictions on foreign ownership of land will not necessarily translate to more investments for the Philippines.

“I’m not sure the reason why foreigners are not coming in to invest is because of the rule on foreign ownership,” MAP president Joey A. Bermudez said.

“The enthusiasm poured over the efforts to change the constitution is disproportionate to the benefits that this may give,” he added.

According to Bermudez, business fundamentals are more important to businessmen than land ownership.

In fact, when the government allowed foreigners complete ownership of banks, most of the foreigners who came in already left. Bermudez said they either closed their operations or sold it to local players.

He said it is more important to make sure that government policies are consistent and transparent, Noting that if businessmen can peacefully do their business in the country, then they will chose to invest here.