| |
How the Philippines Can Attract $3 Billion a Year
US$8.5 Billion in Annual Foreign Direct Investments Possible, Says Experts
(27 October 2006) - An estimated US$8.5 billion in foreign direct investments (FDI) can flow into the Philippine economy every year over the next four years if the country’s investment climate, labor quality, and physical infrastructure are improved.
This is according to a workshop held recently by the Joint Foreign Chambers of Commerce of the Philippines to determine how the Philippines can attract $3 billion in FDI each year. The workshop gathered about 400 foreign and local business and academic experts to draw up sector-specific FDI projections with corresponding recommendations to the government on how these can be met.
These potential investments, if realized, can generate over 2.9 million direct and indirect jobs annually from 2007-2010. The workshop results and recommendations were presented to Trade and Industry Secretary Peter B. Favila, to give to President Gloria Macapagal-Arroyo.
According to former finance secretary Roberto F. de Ocampo, the Philippines cornered only 1.2% of the $90.1 billion total FDI in the Asian region in 2002. While Asian countries are attracting more and more of the world’s FDI, the Philippines, he said, appears to be “a little bit outside the radar screen right now.”
In contrast, China, Hong Kong, and Singapore – the top three FDI destinations in the region, collectively accounted for 81% of FDI in 2002, with China alone receiving over 57% in foreign investments. Indonesia, Malaysia, Thailand and Vietnam are currently receiving more FDI than the Philippines.
Despite this, the workshop participants agreed that the $3 billion target is an attainable and even surmountable one. “The money is out there; we only have to go and get it ahead of the Thais, Indonesians, Malaysians, and Vietnamese,” said former President Fidel Ramos, who delivered the keynote address during the workshop.
In fact, while the country’s net FDI has dropped from an annual average of more than $1 billion in the 1990s to a low of $347 million in 2003, the Philippines has since bounced back and attracted $1.1 billion in 2005. Likewise, the ASEAN region, as a whole, which saw its share of Asia-bound FDI shrink from 51% in 2000 to 11% in 2001, reached a record level of $38 billion in 2005, more than China received when measured on a per capita basis.
“This rising tide of capital is fueling economic growth in ASEAN, including the Philippines,” said Henry Co, Vice President of the American Chamber of Commerce. “We hope that with recent policy reforms that seek to improve the fiscal situation, infrastructure, education and national competitiveness, the country will see more action leading to more FDI, higher economic growth and better jobs for more Filipinos.”
Given this, World Bank Country Director Joachim von Amsberg pointed out that the country is now at a pivotal moment. After recovering from the brink of a fiscal crisis two years ago, the Philippines can either be complacent and simply muddle through, or sustain the momentum to take off and achieve real improvements in the economy and, consequently, quality of life.
President Arroyo, who delivered a statement at the workshop, said that the country is indeed on an extended bull run. “I am confident that this will continue until we achieve take off,” she said.
“The Philippines needs to unleash its potential and take its rightful place as a regional leader,” said Henry Schumacher, President of the European Chamber of Commerce in the Philippines. But these goals will only be met, he added, if the investment climate is predictable and if proper infrastructure is in place.
The six sectors represented in the workshop – energy, health care and tourism, infrastructure, information and technology, manufacturing, and mining – came up with parallel recommendations to make the country more attractive to foreign investors.
Foremost among them is the need to improve governance, such as by addressing red tape, ensuring the transparency of the bidding process, and consistently enforcing laws.
The country also needs to be more foreigner-friendly, beginning with the removal of restrictions on foreign investment and the liberalization of the practice of professions. Certain laws, such as the Build-Operate-Transfer law, need to be amended as well.
The many good existing laws, on the other hand, such as those on protecting intellectual property rights, against corruption and smuggling, and the Mining Act, need to be properly implemented and enforced.
At the same time, human resources and physical infrastructure need considerable improvement. A stronger and more effective education system, improved English proficiency, and better skills training are needed to make our workforce more competitive, while land, air, and sea transportation all need extensive modernization.
The Workshop on FDI was sponsored by Coca-Cola Philippines, Quezon Power, and USAID, with the support of the Business Processing Association of the Philippines, the Chamber of Automotive Manufacturers of the Philippines, the Federation of Filipino-Chinese Chamber of Commerce and Industry, the Makati Business Club, the Management Association of the Philippines, the Philippine Chamber of Commerce and Industry, the Philippine Exporters Confederation, and the Semiconductor and Electronics Industries in the Philippines.
Workshop on FDI Program
Workshop Opening
Welcome Remarks of Mr. Henry Co, Vice President, American Chamber of Commerce
Panel Discussion 1 - Global and Regional FDI Trends
FDI Trends in Southeast Asia by Dr. Roberto de Ocampo, AIM
Perspective of the World Bank by Joachim Von Amsberg, WB
Perspective of the Asian Development Bank by Thomas Crouch, ADB
Trends in International Rankings of the Philippines by John D. Forbes, Amcham ICIP
Panel Discussion 2 - FDI in the Philippines: Past, Present and Future
How much FDI for the Philippines? Hard Numbers by Gregory Domingo, SM Investments Corp.
Constitutional and Legal Restrictions on FDI by Dr. Bernardo Villegas, UAP
Energy, Power and Biofuels by J.V. Emmanuel de Dios, Merritt Partners
Infrastructure: Subic-Batangas Transport Corridor by Joel Valdes, Ernst & Young Transactions Advisory Services
Health Care/Retirement and Tourism by Henry Schumacher, ECCP
IT/ITES by Christopher Beshouri,
President and CEO, McKinsey and Co. Philippines
*Please email chris_beshouri@mckinsey.com for a copy of this presentation.
Manufacturing by Arthur Tan, SEIPI
Mining by Tony Robbins, Philippine Mineral Exploration Association
Keynote Speech
Former Pres. Fidel Ramos' Speech
Presidential Speech
AmCham Vice President Henry Co's Statement Welcoming President Arroyo
President Gloria Macapagal-Arroyo's Speech
Breakout Sessions Results
Constitutional and Legal Restrictions on FDI
Energy, Power and Biofuels
Health Care/Retirement and Tourism
Subic-Batangas Transport Corridor
IT/ITES
Manufacturing
Mining
Total FDI Projections
Total Potential FDI 2007-2010
Potential New Jobs Created Per Annum, 2007-2010
Workshop Closing
Closing Remarks of Mr. Henry Co, Vice President, American Chamber of Commerce
* Other speeches to be uploaded soon
For inquiries, please contact:
Richard Umali
tel: 751-1495
email: richard@amchamphilippines.com
Loit Batac
tel: 818-7911 to 13 loc. 213
email: edith@amchamphilippines.com
|
|
