Philippines: More reforms needed to lure foreign investors

Private sector representatives urged the government to focus on making the country more attractive to investments as the Marcos administration formally launched its 2023-2028 Philippine Development Plan (PDP).

“I used to say it’s not enough for us to be in the radar but we really have to provide the runway lights for them for… investments to land in our country,” Philippine Chamber of Commerce and Industry President George Barcelon said in a forum organized by the National Economic and Development Authority.

These “fundamental issues” such as “power, production costs, logistic costs, connectivity, and human skills sets” will be addressed by the PDP, he noted, along with improving the ease of doing business where the Philippines had already made improvements in the last few years.

Barcelon, however, noted that the last Philippine Business Conference had stressed the need to reinvigorate the resource-based sector, particularly mineral mining, oil exploration, forestry, and salt harvesting.

“We have legislators looking into that and improving the ASIN law,” he said, “We need to tweak it, so that we can grow our salt industries. Our shoreline worldwide is number five, but we import 93 percent of our salt.”

As for oil exploration, he pointed out that Indonesia has seen 20 projects in the past two-three years compared to the Philippines’ three in the past decade.

Also noting the country’s vast mineral resources, Barcelon said “I think the government is cognizant of that and they will open it up”.

The PCCI chief also pointed to the importance of the agricultural sector to economic development. He urged the provision of insurance support and called for a push to involve more of the youth in the sector.

“Aside from the usual talk about farm to market road, post harvest infrastructure, cold storage, and so forth, one of the areas… is that we really have to fortify our crop insurance, otherwise the banks would see that the farmers are not bankable. So, I hope that the government will look into that.”

The youth also have to be induced into joining the agriculture sector via the establishment of more technical schools that provide training on the latest farming advancements.

The farm sector, he continued, should also be opened up to foreign investors and scaled up.

Local governments, meanwhile, should emulate the Philippine Economic Zone Authority (PEZA), which Barcelon said is favored by investors given the clarity of its rules.

“I think our solution is for the local government to have the DNA of PEZA,” he said.

“If you’re talking about growth, inclusivity for the country, the growth should be throughout the Philippines and I think the local government plays a key role in making things easy for people to want to invest in the area of their jurisdiction.”

Private Sector Advisory Council digital infrastructure lead Henry R. Aguda, meanwhile, said digital development was enjoying a “watershed moment” in the Philippines.

However, while adoption markedly accelerated over the last few years, private sector concerns with regard to digital initiatives remain high.

“It’s highest next to energy sufficiency,” Aguda noted, but added that “the nice thing about it ranking high is there’s a lot of effort right now to actually improve it”.

Barcelon raised the issue of connectivity costs, saying that local subscriptions rates remained high compared to other countries.

“It should not go beyond three percent of take-home pay,” he said.