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Tuesday, March 09, 2004
Court scaring investors
By Jessica B. Natad/with Cherry T. Lim
THE recent involvement of the Supreme Court (SC) in decisions affecting the country’s investment will affect the views on the country of potential and existing investors, according to a foreign economist.
“This will send wrong signals to investors, as the perception of uncertainty will arise. It tells them rules can be easily changed in the Philippines,” said Steve Brice, Standard Chartered Bank chief economist in Southeast Asia.
The SC meddled in the implementation of the Mining Act, when it struck down in January the provision that allows full foreign ownership of mining firms. This has worried some 13 foreign firms that have existing investments of $350 million in the country’s mining industry.
Brice said increasing legal certainty, aside from working on the country’s security and stability, is one of the major things the government must do to improve the country’s investment climate.
Small
He also suggested that the country modify its laws on investment to suit the needs of both local and foreign small and medium enterprises (SMEs), which the Philippines might want to attract, with most multinational companies (MNCs) going to China.
In a separate interview, Trade Undersecretary Thomas Aquino said the Arroyo administration has been helping SMEs—both local and foreign.
“The benefits the country gets from them is smaller than the MNCs, but they are good enough,” he said.
In a recent visit to Cebu, Trade Secretary Cesar Purisima also said the Department of Trade and Industry is looking to simplify its procedures.
It is now talking to the Securities and Exchange Commission and the Board of Investments, and “looking at online registration (of businesses),” he said.
The Philippines, through the help of the Japan External Trade Organization (Jetro)-Manila, has been attracting SMEs from Japan to come to the Philippines.
Over 50 Japanese SMEs are doing business in the country, most in the information technology sector, Jetro-Manila executive director Toshio Asakura said.
SCB’s Brice also said the “CNNization,” of the country, which prompts countries such as the United Kingdom and United States to issue travel advisories against the Philippines, has contributed to the slow entry of investments.
CNNization is a newly coined term, which means that anything that comes out about the Philippines in CNN is negative.
“The UK has issued another travel advisory due to the ferry (Superferry 14) tragedy… Some investors who are here in the Philippines to explore opportunities just sit down in their hotels because they are prohibited by their countries of origin to travel around,” he said.
But in general, Brice said, investment in the country will start to pick up after the May national elections, and the country’s economy will remain relatively stable led by the country’s export sector, specifically the electronics sector.
(March 9, 2004 issue)
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