EU seeks changes to infra rules to push investments

The head of the European Union Delegation in the Philippines has urged the government to consider lowering the P1-billion threshold for state infrastructure projects in which foreign contractors will be allowed to take part in, as doing so will allow the country to attract more foreign direct investments (FDI). European Union Ambassador Guy Ledoux noted that the “Government Public Procurement Board resolution to fully liberalize foreign bids for infrastructure project above P1 billion is welcomed and it would be useful to understand how this would work in practice.” “Bringing down that threshold would probably benefit the government even more, allowing more competition also for smaller projects,” Ledoux said in his speech at the 52nd annual meeting of the Philippine Economic Society (PES). As it is, Ledoux pointed out that the Philippines had been making progress in attracting FDI. “Inward FDI stocks increased from 10 billion Euros in 2004, to 25 billion Euros in 2013, while flows increased six-fold. Central Bank figures that came out this week showed a 59-percent increase in the first eight months in 2014 compared to those in 2013, totaling already $4.3 billion—four times the official target of the whole year,” Ledoux disclosed. He pointed out that the bulk of the investment stocks in the Philippines can be traced to the EU, but admittedly, this is only a fraction of the over 200 billion Euros worth of FDI that European companies invest every year around the world. Apart from the liberalizing foreign bids for infrastructure projects, the Philippines can get a much larger share of the EU FDIs by showing its engagement toward “transparency, nondiscrimination and international competition” and by improving the legal framework for foreign bidders to allow them to bid at a more equal footing. Ledoux also noted that fair competition, transparency and an open public procurement policy would enable the Philippines to attract a much larger share of EU FDI. “One area which could play an important role in further increasing our economic relations is public procurement. While global markets are becoming more and more integrated, procurement markets are still lagging behind in this process.  Around the world governments have started to understand the importance of government procurement markets and the benefits that could come from undertaking procurement reforms,” he noted. According to Ledoux, studies in the EU have shown that an open public procurement policy can save up to 30 percent of taxpayer money. A second main benefit is that it can be used as an instrument to fight corruption. Studies have shown that corruption can increase costs by as much as 25-50 percent. Amy R. Remo