The Philippines was deemed one of the most “restrictive countries” in terms of foreign investments, with more barriers than any other large economy in the Association of Southeast Asian Nations (Asean), according to an American trade envoy.
US Embassy Manila Trade Officer Brian Breuhaus was quoted by the Philippine Exporters Confederation Inc. (Philexport) as saying that there was a need for the Philippines to ease restrictions on foreign investments in order to improve the country’s infrastructure and attract more investments, particularly from the United States.
This can be done by amending the restrictive economic provisions in the Philippine Constitution and the Foreign Investment Negative List (FINL). The Constitution provided, for instance, that only Philippine nationals are allowed to operate a public utility. This also applies to almost all public private partnership (PPP) projects.
“No American firms have been involved in a PPP and no foreign firms have taken the lead on a PPP even though they could provide a huge amount of expertise. This would take a constitutional change,” Breuhaus explained, underscoring the need for the country to improve infrastructure, including roads, airports, ports and the internet.
Breuhaus also urged the Philippines to start a Single Window in Customs to make it easier for goods to be shipped here and to approve the Trade Facilitation Agreement (TFA) in the World Trade Organization. This accord will not only significantly reduce the costs of trading globally, but also boost merchandise exports by up to $1 trillion yearly.
Developing countries like the Philippines are expected to benefit significantly from the TFA, capturing more than half of the available gains. For lower middle income countries including the Philippines, the full implementation of the TFA measure is estimated to have the greatest impact in terms of streamlining border procedures. Harmonizing and simplifying trade documents and automating trade and customs procedures would reduce costs by 3.5 percent and 2.9 percent, respectively.
The US was reportedly one of the biggest foreign investors in the Philippines, with the current stock of foreign direct investment flows in the country currently at more than $4.7 billion.
The Philippines is the 30th biggest source of American merchandise imports and ranked as the 32nd largest export destination for US products.