A large majority, 74.8 percent, of European businesses in the Philippines are dissatisfied with the government’s COVID-19 responses and are putting on hold additional investments and delaying investment decisions, a survey among European companies showed.
In partnership with the Delegation of the European Union to the Philippines, the European Chamber of Commerce of the Philippines (ECCP) conducted a survey between 22 May to 22 July to analyze the impact of COVID-19 on business operations in the Philippines, as well as its effects on European-Philippine trade and investment flows.
Results of the Study Report: Impact of Convid-19 on European Business in the Philippines showed that only 25.2 percent of respondents were satisfied with the Philippine government’s COVID-19 efforts, economic support and stimulus package. This leaves the remaining 74.8 percent unsatisfied with the said measures, the report said.
The ongoing health crisis has also affected companies’ investment decisions. The report said that 57.2 percent of the respondents answered that their businesses have put on hold additional or will be delaying the implementation of investment decisions. Broken down, 29 percent of the respondents answered that their businesses have put on hold additional investments, 28.2 percent responded that there will be delays in their investment decisions or implementation of such, while 16.8 percent reported that there are no changes to their current strategy.
Also, 10.9 percent indicated cancellation or withdrawal of their initial investment decision, 10.5 percent are modifying their investment strategy, 3.4 percent are considering relocating some of their economic activities outside of the Philippines.
Out of all the respondents, 1.2 percent answered with an expansion or increase in investments in the Philippines, due to the COVID-19 situation.
Nearly all respondents indicated that their businesses are affected by the COVID-19 pandemic and the measures implemented due to the health crisis. More than half or 56.6 percent reported that these have created significant impact, 35.2 percent answered that they are moderately affected, while 6.9 percent stated that the pandemic and resulting measures have low impact on their businesses. Finally, 1.3 percent responded that it is too early to tell how much the health crisis has affected their companies
Key recommendations to enhance the Philippines’ competitiveness as an investment destination highlight the need to simplify the process of doing business in the Philippines; fast tracking infrastructure development; effectively controlling the spread of COVID-19 in the country; introducing tax breaks and economic stimulus packages; and applying a competitive corporate taxation regime.
In terms of how the COVID-19 situation has affected trade activities, 64 percent responded that client orders have been reduced or cancelled, while only 8.7 percent indicated that there has been an increase in trade activities and orders.
During this pandemic, trade with the EU is being restricted due to various reasons, with the most significant ones being transportation limitation, reduced demand from buyers, challenges in air cargo operations, and border closure.
ECCP President Nabil Francis said EU businesses can no longer bear any further lockdowns.
“We are facing a situation where we cannot anymore stop the economy, it is like a balancing act people are hungry with no jobs. Let the economy restart… or face terrible consequences,” he said.
To help in the recovery of the domestic economy, the ECCP has pushed for some legislative reforms in certain industries to further liberalize the economy and creation of a better business environment.
The ECCP has advocated for the Foreign Investment Negative List (FINL) to be less negative by opening more investment activities.
ECCP has also called for the speedy passage of the amendments to the Retail Trade Liberalization Act (RTLA) to lower the minimum paid-up capital from $2.5 million to $200,000; Public Service Act - differentiating “public utility” and “public services”, consequently liberalizing telecommunications and transportation sectors; and Foreign Investment Act (FIA).
EU businesses said that these reforms will serve as a positive market signal that the Philippines is open for those looking for more favorable market conditions and growth prospects.
A total of 203 companies participated in the poll, composed of 159 European companies and 44 non-European enterprises that do business with Europe. The ECCP also undertook interviews with company executives to delve into recommendations on ensuring business continuity and economic recovery.