DTI gears for opening of PH economy to foreign investors

The Department of Trade and Industry (DTI) will be pushing for a further liberalized Philippine economy to allow the entry of more players in local industries where foreign ownership or participation is currently restricted.

“We would like to push for further liberalization, which will include the amendment of some of the laws we have. The timing is just right as the Duterte administration is now looking at some Constitutional amendments because of a possible change in government structure,” Trade Secretary Ramon Lopez said on Friday.

This forms part of the agency’s investments promotion plan, anchored on the belief that a more open economy will help create a more conducive business environment and attract more foreign direct investments in the country.

“We would like to include [in those amendments] some economic provisions that will have to be modernized as well as some of the equity restrictions. Laws will have to be amended,” he added on the sidelines of the Economic Journalists Association of the Philippines’ (Ejap) Awards Night.

Lopez did not identify specific provisions or industries but has long been expressing his support for “calibrated liberalization” by trimming the Foreign Investment Negative List (FINL) in order to open activities where foreign equity was limited. The target was to open up industries that could create high quality jobs and income without affecting domestic production.

The Philippine government, since the last administration, has made significant strides in opening up the local economy as seen in retail trade, the liberalization in banking, the passage of the Competition Act, and amendments to the Cabotage Law.

Also part of the agency’s investments promotion plans is the modernization of the country’s fiscal incentive regime. The DTI is hoping to submit within the year a proposal together with the Department of Finance.

Under the proposed “modernized” regime, the DTI is targeting to add new kinds of incentives and make these time-bound and performance-based, as what has been done with the Comprehensive Automotive Resurgence Strategy (CARS) Program.  These new incentives include tax deductibility on certain activities such as research and development and inclusive business, accelerated depreciation, and net operating loss carry over (Nolco).

The said incentives could then be tapped by companies registered with the Board of Incentives (BOI) once the effectivity of the income tax holiday lapses, Lopez earlier explained.

The DTI was also hoping the DOF would consider extending the income tax holiday to make the Philippines as competitive as its peers in the region.