EU yesterday strongly urged the Philippines to speed up economic reforms to improve its attractiveness to more foreign investors following the deep impact created by the COVID-19 pandemic and arrest the steep decline in bilateral trade.
Nabil Francis, President of the EU Chamber of Commerce of the Philippines, has called on the Philippines to open the economy further to allow more foreign capital into the country at the virtual European Philippine Business Summit 2020.
“Clearly, there is still a need for the country to further enact enabling policies that will upgrade its competitiveness,” he said as he stressed urgency in light of the fact that companies and investors are now paying more attention to Asia as an alternative location to diversify their businesses activities in light of the adverse effect of COVID-19 for their global supply chains.
The EU business executive also urged, ”The Philippines has to pull away from the catch up game, with its neighbors in the region, and move swiftly.”
He said the Philippines can transform itself into a more attractive investment destination by lifting foreign investment restrictions, providing a competitive fiscal regime, fostering healthy market competition and further improving the ease of doing business.
EU supports the Duterte administration's pronouncement to include significant policy measures in its priority legislation, namely the amendment of the Public Service Act, the Foreign Investments Act and Retail Trade Liberalization act.
At the same time, Francis has urged the government to immediately come up with a competitive fiscal regime to dispel uncertainties. The government’s tax reform for the corporate sector under the CREATE (Corporate Recovery and Tax Incentives for Enterprises Act) Bill but still remained pending.
“The European Philippine business community believes that the swift passage of these measures will serve as a catalyst for economic recovery through job generation and increased competitiveness,” said Francis, who is also CEO of Republic Cement Services, Inc.
Meantime Francis said the EU businesses in the country welcomed the government's latest directive to allow the entry of foreign nationals and certain investors visa subject to protocols.
“These measures will ensure the continued operation of businesses and actively contributing to the Philippine economy. The European Philippines business community stands ready to continue working closely with the Philippine government, the private sector, and all the stakeholders to achieve mutually beneficial goals that will strengthen the country's business environment, in support of increased competitiveness and long term sustainable and inclusive growth.
For his part, Rafael de Bustamante, acting head of the delegation of the European Union in the Philippines, in a speech at the EU-Philippine Business Forum stressed the Philippines has many mechanisms on its favor, but there are still reforms that need to be pursued to realize the country’s economic potentials.
Bustamante lamented that bilateral trade between the two countries is far from its full potential. In fact, he pointed out that in the first nine months of 2020, bilateral trade declined by more than 20 percent. He urged to recover the ground lost during the pandemic.
Comparatively, he said other ASEAN countries including Vietnam (3 times trade surplus) and Thailand (2 times surplus) are enjoying trade surpluses with the EU.
From an investment angle, he said the EU continued to see the Philippines as a large and fast growing market. However, he said, the Philippines did not succeed in mobilizing European traders and investors given the size of capital poured by EU businesses into the Philippines vis-à-vis the potentials of the Philippine market.
For instance, he noted that on a yearly basis, the Philippines attracts only 4 percent of the total EU foreign direct investments.
This disparity is beside the fact the Philippines has a number of mechanisms that it can utilize to its advantage like its membership in the WTO since 1995. Other countries will also appreciate that the Philippines did not impose trade and non-trade barriers and stayed on the track approach space and multilateral trading, its observer status by WTO government procurement agreements committee.
“This is a good step forward for the Philippines. In this context, they are the Philippines should continue to strengthen their focus is to ensure a level playing field. Supporting another into rules based international standard. We prepare the country for our region to region and bilateral trade agreements in the future, a bilateral level, the Philippines partnership and cooperation agreement is the framework for dialogue and cooperation to further strengthen our commercial relations,” he added.
“Now is an opportunity for the Philippines to adopt reforms and policies that will lead the country towards a resilient and sustainable recovery. With a strong political will of the two thirds demonstration, we are optimistic of economic reforms in the pipeline with push through foreign investors and entrepreneurs. Many of them virtually with us today are eager to see substantial progress in economic reform.”