Fidel Ramos signs laws to pry open RP economy

Fidel Ramos signs laws to pry open RP economy

MANILA (Reuter): President Fidel Ramos signed a clutch of laws yesterday aimed at further prying open the Philippine economy despite warnings by a leftist group which said it would vigorously oppose the measures.

Ramos signed laws deregulating the oil industry, abolishing quantity restrictions on agricultural imports, and changes to make the foreign investment act more attractive to investors.

"The signals are clear. The Philippines is determined, ready and eager to compete in a liberalized multi-trade order," Ramos said in a speech after signing the laws.

The oil industry will be fully deregulated by March 1997 and allow market pricing of petrol products to reflect world prices. Increases of oil prices have often drawn vociferous protests in the country.

"The ripple effect created by deregulating this basic industry will be far-reaching and will include the...creation of more quality jobs," the Philippine leader said.

Several oil companies have indicated they plan to set up refineries in the Philippines when the industry is deregulated. Royal Dutch Shell Group, Caltex, a joint venture of Chevron and Texaco, and Petron are the three players in the oil industry here.

Restrictive barriers to agricultural imports were also abolished to allow imports of all farm products except rice, the staple food of the country's 68 million people.

"This will make the economy more efficient and should help the government's fiscal picture," Noel Reyes, research chief of Anscor-Hagedorn Securities, told Reuters in a phone interview.

"This will make the economy efficient and forces us to live within our means. Restrictions on farm imports protected a lot of landed families. We're going to take that net out from under them," he added.

The government will set up a system of tariff rates for agricultural goods instead of restricting their imports. Under the old law, restrictions were imposed on imports of coffee, onions, potatoes, garlic, cabbages and corn, and the government was required to declare a shortage before imports were allowed.

Failure to approve the law would have exposed Manila to possible sanctions from its trading partners in the World Trade Organization, Ramos said.

The leftist Farmers' Movement of the Philippines (KMP) warned the government in a statement on Tuesday the law would flood the country with "cheap, subsidized imports."

"We call on other sectors of the Filipino people to join us in our vigorous struggle against this sell-out," the KMP said.

But Ramos ignored the protests and said the measures would make the economy more efficient.

The law which amends a previously-approved investment law will lower the minimum paid-up equity requirement for foreign-owned companies to US$200,000 from $500,000. For firms in high-tech enterprises, the yardstick was further reduced to only $100,000.

"All of these steps are necessary to opening up the economy," Louie Bate of ING Baring Securities said in an interview. "Consumers would benefit in the long-run through lower prices and that is the bottomline."