PHL: Not true as advertised?

At the advent of globalization, every nation in the globe prepared for a long grind towards prosperity and stability by trying to take a bigger share of the global economy’s pie.  In fact, every facet is fought, including territories (like China claiming sole ownership of the China Sea), just to gain huge advantage.

Today, one of the tightly fought areas is luring foreign direct investments (FDIs).   We don’t have to go that far in understanding this.  Just visit the two (2) Mactan Economic Zones and you will certainly realize how enormous its contribution is to Cebu and the country’s economy.  Despite these entities existence and the reported expansion of our economy in 2012 by 6.6%, however, pedestrians are still wondering, why in heaven’s name, the government’s economic czars are bragging about growth, yet, they remained jobless and are still languishing in poverty. 

To put it bluntly, we certainly have “economic growth” but, absolutely, there is no “inclusive growth”.  Inclusive growth can be achieved through productive employment.  Though a long term approach, productive employment can be addressed by encouraging new investments, both domestic and foreign (or through FDIs).  True enough, we had our own share of FDIs.  Notably, however, most of these have been so focused only on business process outsourcing (BPO).  Unfortunately, the BPO industry does not contribute so much.  This industry employs not only the well educated but the best among them.  Thus, they don’t directly give opportunities to individuals who are among the inadequately educated, the poorest of the poor, so to speak.

In addressing this concern, President Aquino (PNoy), in his keynote speech at the Philippine Investment Forum 2013, enjoined investors to invest in agriculture, tourism and infrastructure (which are seen to support agriculture and tourism through the development of road networks, ports, and airports).  These are intended to address the acute need for jobs among the poorest of the poor who are mostly in the agriculture and construction sectors.

While we totally agree with PNoy’s sales pitch for investments on the aforementioned sectors, it is quite revolting that, for one, while a foreign investor heeded the call (for investments in agriculture), the local players  in the same sector has asked the court to withdraw the tax breaks given by the government through the Board of Investment (BOI). 

To recall, the BOI granted Thailand’s Charoen Pokphand (CP) Foods Corp. (after complying with existing requirements) a six-year tax holiday and a 30-percent tax incentive covering the importation of corn and other raw materials for its plan to develop a P2.32-billion integrated production project.  Notably, agriculture is in the BOI’s Investment Priority Plans (IPPs) since 1986.  It is open to both foreign (requirements are more stringent) and local investors. 

Thus, this recent action of the local players is quite appalling.  First and foremost, CP fully complied with existing requirements and has poured in capital and has started constructing their plants in Luzon.  So that, we may ask, is it appropriate for this government to withdraw the very same incentives that made them (CP) decide to pour in their hard-earned money?  On the other hand, with the local players’ businesses threatened by CP’s existence and the strength it may have due to the bestowed incentives, why have they just complained now.  Remember, since 1986, these perks were already included in the IPP.  Why didn’t these local players raise a howl then and until 2012 for its inclusion in the IPP?  They should have lobbied then that agriculture should instead be included in the Negative List (a list of businesses a foreigner can’t own or have limited ownership), not in the IPP.

Indeed, in our efforts to attract foreign investments, this development leaves a bad taste in the mouth.  If not handled properly, this will send a wrong message to prospective foreign investors.  Remember, we advertised it, they bought.  Now, we want to “change horses in midstream”.  Are we trying to tell the entire world that the Philippines isn’t true as advertised?     

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