Six years ago, when President Aquino was still campaigning for the presidency, his platform had already adopted the recommendations of the Joint Foreign Chambers of Commerce, which were formally presented to his administration in a 400-page paper titled “Arangkada Philippines.”
This week the JFC issued its fifth assessment of the government’s performance on those recommendations – 462 in all – aimed at boosting the country’s competitiveness as an investment destination. Findings: after five years the P-Noy government has shown improvement only in acting on 76 of the 462 – a 16 percent success rating. It performed poorly on 44 and neither improved nor declined on most, or 327, recommendations.
Nonetheless, American Chamber of Commerce senior adviser John D. Forbes said “there has been great progress, not enough progress, but great progress.” The economy, he added. “is moving, these recommendations are being [put in place] but not 100 percent of what we originally suggested in 2010.”
“The reforms have begun and we’re benefitting,” Forbes admitted. The reforms that have been done in recent years, even in the previous administration (of Gloria Macapagal-Arroyo), should be continued, he urged, adding: “The country has a great potential but what we need is a more rapid implementation.”
In its first Arangkada assessment in 2011, the JFC noted that the government had started to carry out 232 recommendations (51.14 percent of the total). By 2014 the tally rose to 331 (74.22 percent) but hardly improved in 2015 with 333 (74.5 percent) of the total recommendations that had received positive attention.
The most improvements in performance, per the latest assessment as reported in the Business Mirror, were in the power industry, mining, infrastructure policy, and manufacturing.
However, zero improvements were noted in the following aspects: boosting economic growth, reducing poverty, enhancing competitiveness, and macroeconomic policy; improving agriculture, water supply, conditions of labor, and local governments. Declining performance in social services was also noted, particularly in education, water, seaports, among others.
In view of the presidential/national elections on May 9, the JFC is drawing up a new Arangkada Philippines blueprint – a new set of recommendations to be presented to the next administration. Some specific proposals so far put forward may be good for business but detrimental to the people’s interest and welfare.
At its fifth Arangkada assessment, The JFC invited the representatives of four presidential candidates to discuss the economic platforms of their principals: Vice President Jejomar Binay, Senator Grace Poe, Senator Mar Roxas, and Mayor Rodrigo Duterte.
The four representatives converged on the issues of poverty alleviation, infrastructure, and economic reforms but with varying approaches. Binay’s representative reportedly made the most comprehensive presentation, and one newspaper reported that Binay’s platform “contained mostly the foreign business community’s wish list.”
But at least two foreign chamber officials expressed dissatisfaction with the presentations. Canadian Chamber president Julian Payne said that on the issue of addressing foreign investment restrictions – a major concern of the JFC – he found no satisfactory answer. Australia-New Zealand Chamber executive director Ryan Evangelista lamented that he heard no clear action plans from any candidate towards enabling the Philippines to attain inclusive growth in the next decade.
Forbes and Payne are the most vocal JFC figures in calling for further reforms to resolve the slow entry of foreign direct investments into the country ever since the Marcos dictatorship.
JFC has provided comparative data on FDI inflows for the Marcos and Aquino governments. The data show that under 16 years of Marcos (1970-1986 – 14 years as a dictatorship) annual FDI inflow averaged only $117 million. From 2011 to 2015 under P-Noy, the average FDI inflow rose to $3.97 billion a year. But the increase still has left the Philippines lagging behind its ASEAN neighbors: Malaysia, Thailand, Indonesia, and Vietnam.
Attributing the slack FDI inflow to various restrictions embedded in the Philippine Constitution and investment laws, the JFC is pushing for decisive actions by the next administration to remove what the foreign businessmen perceive as hindrances.
Foremost of these is the amendment of the 1987 Constitution to strike down the total ban on foreign land ownership and the 40 percent limit to foreign ownership of public utilities and other businesses. Related to this, JFC wants to reduce the negative list of areas of investments barring foreign investment: 11 types of businesses are placed in this category under Executive Order 184, signed by P-Noy last year.
Besides these, Forbes and Payne want certain regulations removed or relaxed as they allegedly hinder foreign investments. Among these are:
• the $200,000 (or P9,458,000) minimum investment required of foreigners wishing to put up a business in the Philippines. Payne claims this is a “big disincentive.”
• the 32 percent individual income tax ceiling and the 30 percent corporate tax. The JFC wants both tax rates reduced to 25 percent, purportedly as an incentive for both business firms and their officials and employees.
The JFC has gone further by recommending an increase in consumption taxes – by raising the value-added tax from 12 percent to 15 percent. Already consumers continue to complain about the 12 percent E-VAT.
This JFC proposal could rekindle the public protests that erupted last October after Bayan Muna Rep. Neri Colmenares questioned, during the budget deliberations in the House, the grant of “sovereign guarantee” to at least 17 big corporations, mostly foreign-owned or joint ventures with Filipinos. Under the guarantee, the government commits to reimburse the operational losses that these firms claim to have incurred, For instance, Maynilad Water Services claims P3.5 billion and Manila Water Co. P70 billion.
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Email: satur.ocampo@gmail.com
Published in the Philippine Star
March 5, 2016
