Foreign Investors Hesitant to bring business to Philippines

Foreign investors are hesitant to establish expansion projects in the Philippines as they find the country’s cost of doing business too expensive coupled with restrictive ownership rules.

Investment promotion agencies (IPA) report that the ownership limits and business costs prevent them from relocating to the country. IPAs have also informed the Cabinet-level Fiscal Incentives Review Board (FIRB) that they have difficulty getting around the lack of public utilities and stable internet.

The FIRB chairman and Finance Secretary, Carlos Dominguez, responded by saying that the government would push for bills that will open up the economy to foreign investors. He specified that the Public Service Act (PSA), Foreign Investments Act (FIA) of 1991, and the Retail Trade Liberation Act (RTLA) of 2000 need to be amended and approved.

Last December, President Duterte signed RA 11595, amending the RTLA. RA 11595 lowers the minimum capital for foreign retailers to P25 million from the original P125 million to attract more international businesses.

This leaves the PSA and FIA amendments both of which complement the investment and job generation multiplier of RA 11595.

Dominguez stresses that the revisions to the PSA be signed into law as it allows the entry of telecommunication firms. He emphasized that lifting foreign equity restrictions will let telco firms compete in delivering better internet connections.

Based on data from the Philippine Statistics Authority, foreign investments registered by IPAs fell by more than 71% from 2019 to 2020. These agencies are yet to recover the confidence of foreign investors as capital inflows dropped by over a fifth from P75.64 billion to P58.87 billion last year.

Source: Philstar