VisMin businesses are upbeat for a reason but also mindful of the work to be done

When we say that the Philippines is a country of huge potential, it is not just we in Metro Manila who are saying that. Business leaders and heads of business chambers in Visayas and Mindanao share the same sentiment. 

I am able to say this because I personally witnessed their enthusiasm about our prospects. Earlier this month, the Stratbase team conducted two roundtable business discussions in Cebu and Cagayan de Oro City.

The business leaders agreed that there were three things that made up the Philippines’ core competencies: the richness of our natural resources, the youth and dynamism of our population, and our strategic location. 

But the business leaders knew we should not be complacent with these strengths and competencies. Much remains to be done and plenty of challenges on different fronts and levels.

The bigger story is that we could achieve so much more as an economy and as a nation, but many things hinder us from these aims. The local investors cited the challenges they currently face, first in their respective spheres and collectively as we aspire to be an investment hub in Southeast Asia. 

Foremost among these challenges is the bureaucracy itself. Despite efforts and initial gains, bureaucratic bottlenecks are common, more pronounced in some areas than others. And the people are very much aware of this.

The latest Stratbase-commissioned survey conducted by Pulse Asia shows that nearly 60% of Filipinos believe that the most significant factor hindering foreign investments in the Philippines are the complicated rules and regulations which hamper the flow of doing business in the country.

Cost of production is another important consideration in determining the capacity of the Philippines to attract investors. The cost of production in the country is always higher than those in the neighboring countries, the cost of electricity is also something we need to improve on. 

A third major hurdle is the lack of infrastructure. While infrastructure growth has been the priority of the government in recent years, the traffic situation in our key investment areas need to be improved as more people are able to afford vehicles.

Another aspect of infrastructure that the government should focus on is digital infrastructure. There is a clear need for faster, higher-quality, and more accessible internet service across the country and not just in urban hubs. 

Finally, there is the challenge of upskilling Filipino workers. We need to provide more training and more budget for educating the youth in the different sectors where the Philippines has potential.

According to the participants in the roundtable discussion, there is a need to support the technical skills of the population because while the Philippines has a very good human resource, they are not equipped to cater to the needs of the industry.

There remains a misalignment between the education that they receive and the actual needs of the industry sectors in the country. The business sector has no say in the curriculum design of the Department of Education. 

Additionally, the business leaders suggested that there should be a change in the TESDA charter to ensure that ample scholarships are provided to allow the working population to have the proper skills required by the industries.

While the government policy is to allocate the biggest funds to the education sector, the performance of our students is still ranked below those of other countries. In fact, the business leaders said, even though students finish a four-year course here, standards are still below par. 

These are concerns that local businesses cannot address by themselves. So while they acknowledged that the government has made laudable initiatives to work on said challenges, they also emphasized that there is room for even better solutions that would help propel the Philippines – and not only the Luzon island – to achieve steady, sustainable growth driven by investments from foreign and local businesses alike.

One such solution that is worth considering is Executive Order No. 18, “Constituting Green Lanes for Strategic Investments.” Issued by the administration in February 2023, the EO serves as a signal to investors that the Philippines is ready to have more investments come in the country, especially as the country continues to position itself as a prime destination for investments.

Still, this initiative could have greater effect and improved results if institutionalized into a law. Legislated policy will ensure that the regulatory environment of the country will be conducive to business and inter government agencies to work together.

With ease of doing business said to be the most significant factor in hindering investments, constituting green lanes will provide investors with a faster and streamlined process in entering the Philippine market. This can cover the fast-tracking of permits from concerned government agencies as well as the Local Government Units (LGUs). To also avoid delay in the passage of applications, the processing time in which LGUs and government agencies must act must be specified. 

Likewise, digital transactions can also be prioritized to enhance transparency and accountability by providing real-time tracking and automated records, ensuring that investors can monitor progress and access detailed documentation. Secure protocols and verifiable systems protect against fraud, while transparent fee structures and comprehensive reporting offer clarity on costs and transaction details.

The legislation of the green lanes initiative will certainly do much to improve our economic growth. More importantly, over the long term, it will contribute to our shift to an investment-led growth from overwhelmingly consumption-led economic activity. This would create more and better-quality jobs for our people and ensure job security for them. 

Then again, this is just one among many steps we could take to improve the viability of the Philippines as an investment destination. The local businessmen have spoken. The national government as well as different stakeholders in our society must continue to listen and work together for the ultimate benefit of our economy and our people.

Rupert Paul Manhit is the COO and managing director of think tank Stratbase Group. He is the executive director of Philippine Trade Foundation (Phils Inc.)