German Firms Won’t Invest in Philippines Because of Economic Policy, not Covid-19

The German-Philippine Chamber of Commerce and Industry (GPCCI) and its member companies ran a survey covering 210 firms in the Philippines and Singapore, dated May 11-24. The survey showed that 32% of German companies are currently holding back expansions, while 19% are holding back first time investments in the Philippines. It was evaluated and shared on Monday (June 1).

The survey stated that the most reported restrictions in the Philippines stifling foreign investment are foreign ownership and equity caps, legal requirements, and restrictions on specific types of legal entity and license requirements.

The GCCPI stated that “while some companies (20% of respondents) indicated that these restrictions are not holding back their investment decisions, more than half of German companies believe that current policies are not conducive for investing in the market.”

The fact that the survey was taken during the ongoing Covid-19 pandemic speaks to the importance of economic policy change; even more so than the difficult global situation we are enduring.

German firms also stated that they would be disadvantaged in the Philippine economy, because countries like China, Korea, Japan or other Southeast Asian nations, currently have existing free trade agreements (FTAs) with the Philippines.

This highlighted the urgency for the Philippines to resume FTA negotiations with the European Union, which have been stalled for more than 3 years since the last talks in February 2017.

In a statement that accompanied the survey, GPCCI president Tristan Arwen Loveres said “We encourage that the next negotiation round should be scheduled this year,”

83% of German companies in the survey described the bilateral FTA as “very important” to their businesses.

“While some companies (or 20 percent) indicated that these restrictions are not holding back their investment decisions, more than half of German companies believe that current policies are not conducive for investing in the market,” GCCPI said.

92% of survey respondents said that an FTA that removes barriers to trade and investment would increase the competitiveness of their businesses in the market. At least 45% said that they would expand current investments in the Philippines if the FTA eased current restrictions, while 26% said they would consider first-time investing in the market. An FTA that removes barriers to trade and investment, said 92 percent of respondents, would increase the competitiveness of their businesses in the