Investors restless over slow pace of reforms in RP
Investors restless over slow pace of reforms in RP
P. Parameswaran, Agence France-Presse, Manila
Foreigner investors in the Philippines are becoming increasingly restless over the slow pace of reforms urgently needed to improve the country's difficult business climate and check eroding competitiveness.
They are concerned with infrastructure bottlenecks, bureaucratic corruption and tax avoidance, antiquated labor legislation, slow pace of formulating laws and insufficient implementation, and security problems.
They are also equally worried over this Roman Catholic country's out-of-control population growth, large budget deficit, lack of consistency and transparency in investment policies and decline in English proficiency, the premier competitive advantage of Filipino workers.
President Gloria Arroyo, more than two years in power, has been seeking to introduce reforms to increase economic growth and attract investments but they may not be rapid enough to maintain Philippine competitiveness in a globalized economy, foreign business leaders say.
To reverse the trend of slowing foreign investment, the country needs to "restore the confidence of the foreign investment community, not with soothing words but with forceful actions," the American Chamber of Commerce of the Philippines (Amcham) said in an investment policy advocacy paper seen by AFP.
The report, circulated to all the top administration leaders and heads of the public and private sectors, pointed out that some business costs in the Philippines, especially bureaucracy, electricity, labor and transport, are higher than regional competitors.
The Amcham report, entitled "The Roadmap to More Foreign Investment," said the Philippines should modernize infrastructure, improve governance, slow population growth, accelerate legal reform, reverse declining English standards and improve security.
"The report contains well-known problems that are of concern to foreign investors in the Philippines and that have been identified repeatedly by international surveys which have shown a gradual deterioration in Philippine competitiveness in recent years," an Amcham official, said requesting anonymity.
The Philippines has slipped 13 steps to the 61st spot out of 80 countries covered in the latest Global Competitiveness Report released by the World Economic Forum.
The Amcham official said the report had been welcomed as "incisive and consistent" with goals of reformist elements in the Philippines.
"We acknowledge the start of reforms to deal with many of the problems and hope these reforms become deeper and be effective and long lasting."
The official said while American investment in the Philippines was still rising, the Amcham report "identified issues for the Philippines as a nation to improve in order to attract even more foreign investment capital in future years."
He said while American investors were happy with the quality and costs of telecommunications, they were concerned about inefficient transport and the possibility of brownouts occurring again if power reforms were not implemented soon.
U.S. and Japanese companies are among the largest employers, taxpayers and exporters in the Philippines.
The Japanese Chamber of Commerce and Industry's main concerns are ill-developed infrastructure and labor and security problems.
The chamber raised the problems with Arroyo five months ago but "we have yet to see positive policy measures permeating through the entire bureaucracy," a depressed Japanese ambassador Kojiro Takano told reporters last week.
"This clearly illustrates that the national government's key policies are not properly disseminated, not correctly enforced in the local level," he said.
Takano cited "sudden changes" in an automotive taxation system and an "irrational" customs duty regime as examples of "lack of coordination, consistency and rationality" in government policies.
Problems faced by Japanese businessmen have hit tourism earnings.
"Japan is merely four hours away from the Philippines by plane, yet more Japanese tourists go to Thailand which is a good seven hours away, to Singapore, or to Indonesia," he said.
But Takano's stinging comments on security -- where he described the Philippines as dangerous and frightening -- drew an angry response from President Arroyo, who felt they were "exaggerated and unfair."
Arroyo said however that the government would take such criticism "as a challenge for us to do better."
Senate President Franklin Drilon said the Japanese envoy's comment could be "a wake-up call" for Arroyo, who has said she would not contest in presidential elections next year.