MANILA, Philippines – It is the same set of economic, political, and peace and order issues that concerns foreign chambers of commerce in the Philippines for five years now. But the call for the government to act on these is louder than ever, especially as the country will have its new president this year.
During the 5th Arangkada Forum on Tuesday, March 1, representatives and guests are in unison to say that there remain constraints for the country to totally achieve inclusive growth.
Inclusive economic growth or having equitable opportunities for all is the platform of President Benigno Aquino III's administration.
The Arangkada assessment showed an overall improvement in the percentage of 462 recommendations that are active or moving, or 74.50% as of latest in 2015, from 51.44% from the first assessment in 2011.
“The active/moving total in 2015 was very close to the total in 2014 of 74.22% indicating progress of reforms underway,” the Joint Foreign Chambers of the Philippines (JFC, the organizer and lead for the Arangkada forum and assessment project) said in a statement.
The sectors that progressed in terms of policy and reforms include business process outsourcing (BPO), infrastructure, manufacturing, and tourism.
Reforms in legislation, environment, business resiliency, governance, labor, macroeconomic policy, and health were also cited as progressing, with reforms that enable a more competitive business environment.
Reforms in the following sectors and business enabling mechanisms should be strengthened and reinforced: agribusiness; creative industries; infrastructure (airports and railways); seaports; telecommunications; logistics; and mining, plus lowering business costs; greater access for foreign equity and professionals; local governance; security; education; and poverty alleviation.
Diversify, be open
Former finance secretary Roberto “Bobby” De Ocampo said the country needs to diversity from Overseas Filipino Workers’ remittance- and BPO-driven economy. He also noted that the country needs to be “really open” if it wants to attract more foreign direct investments (FDIs).
FDI inflows from January to November 2015 hit $5.45 billion, a 3% decrease year-on-year, thus JFC aims for the country to increase its annual FDIs to over $10 billion. JFC also aims to double export of goods target to $100 billion through product diversification and access to new markets.
“[And] have less restrictive rules on entry of direct foreign investments in the country,” he said.
De Ocampo also called for the decongestion of Metro Manila to create more space for investors to build their businesses in the capital.
He also noted that operations of the Ninoy Aquino International Airport (NAIA) being transferred to Clark, plus the completion of Metro Rail Transit Line 7 (MRT7) would help ease decongestion, as well as spread more investments to areas nearby Metro Manila. He also suggested creating special tourism zones as a concentrated location to attract more foreign tourists.
De Ocampo also said the government needs to be more decisive on the issue of mining. “Identify if mining is really good for us. Making a decision is better than dilly dallying,” thus giving mixed signals to investors.
Canadian Chamber of Commerce of the Philippines President Julian Payne said that there is a failure of real growth in mining, as well as agriculture in the country. Issued in 2012, Executive Order 79 authorized the Mining Industry Coordinating Council (MICC) to review and rationalize the local mining sector. MICC though is not keen yet to lift the ban on new mining agreements, despite declining revenues.
Payne said the country has a lot of growth potential in mining but, “If there are no new permits [for] mining, there’d be no new investments [and jobs]. [The 2016] presidential candidates must be clear on their stand (on this issue)," he said. The presidential candidates have been invited to the forum, but Valenzuela City Mayor Rex Gatchalian came for Senator Grace Poe; vice presidentiable Allan Peter Cayetano for Davao City Major Rody Duterte; former finance secretary Margarito "Gary" Teves for Vice President Jejomar Binay; and Marikina City Representative Miro Quimbo for Mar Roxas. Senator Miriam Defensor-Santiago had no representative in the forum.
De Ocampo also noted that good governance, which is another cornerstone of the Aquino administration, is not equal to excessive, restrictive regulations, “that make investors concern about the government’s real intentions.”
European Chamber of Commerce of the Philippines President Guenter Taus said in a press conference Tuesday organized by JFC that the country really needs to be more open to encourage competition. “Competition is good to bring down prices of basic services,” he said.
Payne added that there is a huge potential to ease restrictions on FDIs but “changing the Constitution (for such) is a big hassle.”
Toward inclusive growth
Payne noted that for the country to have true inclusive growth, it should focus on rural employment and develop the infrastructure in rural areas.
World Bank lead economist for East Asia and the Pacific Rogier van den Brink said that gross domestic product (GDP) originating in agriculture is more beneficial for the poor. Also, underemployment (or the talent-job mismatch) is more the problem of the educated than the poor.
The government also needs to truly ease doing business in the country, as starting and maintaining a small business here is still challenging, Van den Brink added.
John Forbes, senior adviser of the Arangkada Philippines project at the American Chamber of Commerce of the Philippines, meanwhile, noted that Internet broadband connectivity in the country sucks, with most schools, especially in the rural areas, still having no Internet connection, thus making the digital gap more glaring.
But despite the constraints, Payne said it must be acknowledged that the government has made significant accomplishments over the years.
But, “We need a new basis for the next administration. We want to see continuation of reforms, and the next administration should build on that and we need more rapid implementation (of these reforms),” Forbes said.