Economic reforms to attract more investors from Europe

MANILA, Philippines — The immediate passage of economic reforms such as amendments to the Foreign Investments Act (FIA), Public Service Act (PSA) and the Retail Trade Liberalization (RTL) Act, as well as accelerated vaccine rollout and eased travel restrictions for foreign investors would be crucial for the country to see the entry of more European businesses by next year, the European Chamber of Commerce of the Philippines (ECCP) said.

ECCP president Lars Wittig said in an online briefing yesterday that following the enactment of the Corporate Recovery and Tax Incentives for Enterprises Act, which cut the corporate income tax rate and modernized the incentives system, it is important to intensify efforts to improve the country’s competitiveness and make it more attractive for trade and investments to recover from the adverse effect of the pandemic.

“We urge the Philippine government to maintain the momentum and enact major economic reforms including amendments to the FIA, PSA and Retail Trade Act to accelerate recovery, further facilitate more FDIs (foreign direct investments), create more jobs for Filipinos, and drive the Philippine economy to greater heights,” he said.

The proposed amendments to the FIA seek to ease restrictions on foreign businesses, while amendments to the PSA aim to limit public utilities to natural monopolies such as distribution and transmission of electricity, water and sewerage, and allow greater foreign investment in the telecommunications and transportation sectors.

Under the proposed amendments to the RTL, the minimum required paid-up capital for foreign retailers would be reduced to encourage them to operate in the country.

Wittig said political stability and predictability of the regulatory environment, as well as the country’s human capital are also key considerations for investors.

He said the country’s pandemic response, particularly a vaccination level that would prevent future lockdowns, is likewise being considered by investors.

“I think government has been effective in targeting NCR (National Capital Region) [for vaccination]. We are expecting and hoping to see this is sustained and we can thereby avoid future hard lockdowns,” he said.

ECCP executive director Florian Gottein said easing entry barriers for foreigners traveling to the country, particularly businessmen, would be a big factor in attracting new European investors next year.

“Imagine if someone is exploring potential investment or business opportunities in the Philippines and has to come here and has to spend two weeks in quarantine before he can move to business partners, site visits, etc. It is a very painful process,” he said.

He said ECCP has so far helped more than 200 businessmen that have faced difficulty in entering the country.

As the vaccine rollout continues, he said the group is optimistic there would be more flexibility when it comes to future travel arrangements.

Last year, the Philippines received a total of $6.5 billion in FDI net inflows, with $323.9 million coming from Europe.