More reforms needed to achieve 8% growth – JFC

MANILA, Philippines - The Philippine government has made progress in acting on recommendations of the Joint Foreign Chambers (JFC) to increase investments in the country, but it will have to undertake more reforms and sustain gains to allow the economy to accelerate by eight percent and make the growth inclusive.

“We in the JFC believe the economy can grow by eight percent,” Australian-New Zealand Chamber of Commerce Philippines president Ian Porter said during the Arangkada Philippines Forum press conference yesterday.

For the Philippine economy, which has been growing at an average of six percent since President Aquino came to office to expand at a faster rate of eight percent, he said the government has to sustain reforms to make the country a more attractive location for investments.

American Chamber of Commerce of the Philippines (AmCham) senior advisor John Forbes said that based on the fourth assessment of government actions on 462 recommendations made by the JFC, 74.22 percent or 331 are active or moving in 2014, up slightly from 73.26 percent or 326 in 2013.

Meanwhile, 25.78 percent or 115 of the recommendations were considered dormant in 2014, down from the previous year’s 26.74 percent or 119.

The recommendations were put forward by the JFC, which is composed of the American, Australian New Zealand, Canadian, European, Japanese and Korean Chambers in the Philippines and the Philippine Association of Multinational Companies Headquarters, Inc., in the Arangkada report launched in 2010.

The proposals cover seven big winner sectors such as agribusiness, business processing outsourcing, creative industries, manufacturing and logistics, mining and tourism, medical travel and retirement, and are intended to allow the economy to grow at a much faster pace through the creation of $75 billion in new foreign investments, 10 million jobs and over $1 trillion revenues by 2020.

While there have been improvements based on the latest assessment of the Arangkada recommendations, Forbes said “there is more to be done.”

In particular, Porter said the three sectors where there is great room for improvement are in manufacturing, agribusiness and mining.

While the manufacturing sector has been growing, he said further improving the country’s competitiveness would encourage more investors to set up facilities here which would create jobs.

He said the government should also focus on the agribusiness sector in order to provide jobs to those in the countryside.

“Agribusiness is very very, important because it is an area where, if the Philippines took off and it has the potential to do so, it will do a lot to alleviate poverty because it will take place in areas subject to high levels of poverty,” he said.

As for mining, the government needs to issue the policy to encourage investments in the sector.

“No legal investments are taking place in mining. The shame about it is internationally reputable mining companies who have good records and can provide sustainable development of the mining sector are excluded, so what is happening is illegal mining is taking off,” Porter said.

He said opening the economy further through the lifting of economic restrictions on foreign ownership in the Constitution would likewise be important in attracting more investments here.

“Lifting the economic provisions of the Constitution is really a priority. This is not a view only the JFC holds, but just about any business organization in the Philippines holds. This is the absolute key to lift this country’s economic growth and alleviate poverty,” he said.

In addition, European Chamber of Commerce of the Philippines president Michael Raeuber said keeping business and transport costs down, as well as removing red tape, are important to get investments and support economic growth.

In the coming years, AmCham executive director Ebb Hinchcliffe said the JFC would want to have other specific targets achieved such as: an increase in the share of overall investments to the gross domestic product (GDP) to 30 percent from the current 19 percent; for foreign direct investments to reach $10 billion from $6 billion; public spending for infrastructure to rise to at least five percent of GDP; peace and order in Mindanao; an unemployment rate below five percent and to reduce poverty to 18 percent by 2016.

Meanwhile, National Treasurer Roberto Tan, who read the speech of Finance Secretary Cesar Purisima during the forum, said the Executive branch would continue to work with the legislative branch to ensure the Economic Development Cluster’s priority bills would be passed.

“These include, but are not limited to, amending and shortening the foreign investment negative list, Fiscal Incentives Rationalization, Tax Incentives Monitoring and Transparency Act, the Customs Modernization and Tariff Act, and amendments to the BOT (Build Operate Transfer) Law,” he said.