ATTRACTING foreign direct investments (FDI) continues to be a challenge for the Philippines, as high power costs, government policies on foreign ownership and the difficulty in doing business continue to haunt foreign investors.
“Foreign direct investment continues to be a dream (for the Philippines),” said the European Chamber of Commerce in the Philippines Cebu Business Council chair Sabino Dapat. Dapat was one of the reactors during the economic forum in February organized by the Financial Executives Institute of Cebu (FINEX-Cebu) Inc.
He said neighbors in Southeast Asia, particularly Indonesia and Vietnam, have been overtaking the Philippines, which used to be one of the strongest economies in Asia.
In 2015, FDI pledges in the country reached P245.21 billion, representing a 31.2 percent increase from 2014, said the Philippine Statistics Authority whose data is sourced from the seven investment promotion agencies (IPAs) in the country.
The manufacturing sector received more than half of the total amount committed last year, accounting for 54.9 percent, followed by electricity, gas, steam, and air conditioning supply sector (19 percent), while the third biggest recipient is the administrative and support service activities industry was the business process outsourcing sector (24.3 percent).
In Southeast Asia, it is Singapore that is leading the FDI race. According to the ASEAN Foreign Direct Investment Statistics Database, the Philippines ranked fifth in FDI among the 10 ASEAN-member countries in 2013.
“There is difficulty in attracting foreign investors (to the Philippines),” said the ECCP official. Singapore’s FDI amounted to $60.64 billion, Indonesia attracted $18.44 billion, Thailand $13 billion, Malaysia $12.3 billion, Vietnam $8.9 billion, and the Philippines $3.86 billion.
For Cebu Investment and Promotions Office (CIPO) Officer Benjamin Joseph Yap, although the Philippines is behind its top ASEAN neighbors due to foreign ownership regulations and high power cost issues, the local government units can do its part to ease doing business.
“On the ease of doing business, we have to strengthen our LGUs. By standardizing our forms and procedures and fast-tracking necessary steps to open a business, that’s how we can help them, us being in the government,” Yap stressed. He said LGUs can give out incentives, through their respective investment codes to investors to encourage them to do business in their town or city.
Up to the present, Yap said only the cities of Cebu, Mandaue, and Lapu-Lapu have existing investment codes, while other LGUs, especially those in northern Cebu, have started crafting their own investment code.
For CIPO, he said businesses facilitated through his office can avail of property tax exemption good for six to ten years.
Meanwhile, Board of Investments (BOI) Cebu Officer-in-Charge Ellorence Cruz said that investment promotions agencies (IPAs), where BOI is the lead agency, should also be streamlining its system in giving out incentives, as investors go around from one IPA to another only to find out that one gives out better incentives than the other. The Philippine Economic Zone Authority (Peza), for example, gives out more generous incentives than BOI, especially for export manufacturing businesses.
“BOI can also give this incentive, but when investors approach us and they are exporters, we advise them to go to Peza instead,” Cruz said.
Making the investors happy, she said, should be the driving force of these IPAs.
The World Bank’s Ease of Doing Business report showed the Philippines’ ranking slipping six notches in 2016, from the 97th spot to 103 across 189 economies.