CEBU business leaders are in favor of easing restrictions on foreign investments as this will help in the country’s efforts to resuscitate the economy.
Mandaue Chamber of Commerce and Industry president Steven Yu said while this would result in competition among local players it will open up more opportunities in terms of employment generation, upskilling of workers and innovation among business owners.
“It is a step in the right direction, to diversify our economy from over-reliance on overseas Filipino remittances and business process management (BPM), especially now that tourism is on the back burner due to the pandemic,” said Yu.
The Philippines protects domestic industries by capping foreign ownership at 40 percent. Full foreign ownership is permitted in retail, but heavy restrictions are imposed on paid-in capital and investment per store, discouraging entries. Foreign businesses usually enter the Philippine market through joint ventures with local partners or franchise chains.
Foreign direct investments (FDI) contracted by 24.6 percent to US$6.5 billion in 2020 from $8.7 billion in net inflows in 2019, mainly due to the economic impact of the Covid-19 pandemic.
But the latest report by the Bangko Sentral ng Pilipinas (BSP) showed renewed confidence among investors at the start of the year as FDI net inflows grew by 41.5 percent to reach $961 million in January 2021 from $679 million in January 2020.
“This development reflects the investors’ optimism at the start of the year due in turn to the gradual reopening of the economy under the ‘new normal’ condition, easing of lockdown measures, and positive news about the rollout of Covid-19 vaccines,” the BSP said.
On April 13, 2021, President Rodrigo Duterte named three bills for immediate enactment—the Public Service Act (PSA), Foreign Investments Act (FIA) and the Retail Trade Liberalization (RTL) Act.
Amendments to the PSA, FIA and RTL are part of the list of priority measures identified by the Legislative-Executive Development Advisory Council to be passed before the Duterte administration ends in mid-2022.
Cebu Chamber of Commerce and Industry (CCCI) president Felix Taguiam said these bills are a welcome relief to the local economy. But he warned that the government must also put in place safety nets to protect the local industries.
CCCI vice president for mobility Mike Cubos said allowing full ownership of public services and easing of restrictions on foreign investments bring many advantages to our country.
“I think the biggest impact on this is the increase of direct and long-term investments that can jumpstart our struggling economy. This measure plus the Create Law is a powerful combination. This can provide more jobs, opportunities and even the potential of knowledge transfer which I am excited about,” he said.
The Create law reduces the corporate income tax rate — formerly the highest among Southeast Asian nations at 30 percent — to 25 percent for large companies and 20 percent for small businesses.
One industry that is seen to benefit from this relaxed and open business environment is the BPM industry.
Cubos said this will attract more locators to open business here, especially in the countryside.
“Having less restrictions on BPM investments will result in a stronger industry, and this will catapult the Philippines back to the global rankings,” said Cubos.
Cebu City nosedived to the 52nd rank from ranking 15th in the Top 100 Super Cities by Tholons in 2020.
Cebu City fell short in the current index such as in digital innovation, re-imagining of consumer experience, transcendental knowledge, future readiness, digital competitiveness and diversity and inclusion which were given high emphasis by Tholons during this pandemic-stricken business environment. (KOC)