Despite the expected Malacanang approval of the CREATE bill following Senate passage, the Management Association of the Philippines (MAP) said there is still so much to do to attract foreign direct investments.
“We still have a lot of work moving forward. The restrictive provisions in our Constitution and our laws need to be addressed,” said MAP President Francisco ED Lim at The 9th Arangkada Philippines Online Forum 2020 on Foreign Investment in the Post-Pandemic Philippines.
Lim cited problems on outdated laws and regulations, enforcement issues with other laws. “We have to clear up our name in the global perception index even as we need to strengthen our institutions,” he said.
Lim cautioned against benchmarking efforts in attracting FDIs with what had been done in the past. Rather, he said, Philippines should benchmark against what other countries are doing.
“We have to do much more than our ASEAN counterparts and consistently at that, lest we will not be able to catch up with them in attracting foreign direct investments to the Philippines,” he said.
The Philippines has been lagging behind many of its Asian counterparts in attracting FDIs.Based on the 2019 Global Competitiveness Report of the World Economic Forum (WEF), the Philippines is the least competitive among the founding members of the ASEAN. We ranked 64th among 141 economies while Singapore 1st, Malaysia 27th, Thailand 40th , and Indonesia 50th.
Undoubtedly, he said, this is partly because doing business in the Philippines is not as easy as doing business in many parts of the ASEAN. While the Philippines registered double digit increase of +29 notches in the 2020 Ease of Doing Business Report, the country still ranked 95th among 190 economies.
Other founding members of the ASEAN have fared much better. Singapore ranked 2nd; Malaysia 12th, Thailand 21st, and Indonesia (73rd). Even relatively new ASEAN newcomers Brunei and Vietnam have outranked us by placing 66th and 70th, respectively, or 20 notches above us.
“Sadly for us, we are lumped together with countries like Bosnia (90th), El Salvador (91st), Nepal (94th), Guatemala (96th), Togo (97th), Samoa (98th) , and Sri Lanka(99th) in terms of Ease of Doing business. Notably, there are no other ASEAN countries in the group where we are ranked,” he said.
As a result, the ability to attract FDIs has significantly suffered. According to UNCTAD’S World Investment Report 2020, foreign direct investment inflows to the Philippines fell to US$5 billion in 2019, down from US$6.6 billion in 2018. The US$ 5 billion FDI in 2019 is more than US$3 billion less than the US$ 8.7 billion FDIs we had in 2017.
“Our FDI data are a pittance when compared to the other founding members of the ASEAN. Based on UNCTAD data, in 2019 alone, Indonesia had more than 4 times at US$23.1 billion, Vietnam had more than 3 times our FDIs at US$16.1 billion, Malaysia at US$7.7 billion. This is not even to compare ourselves with Singapore which had US$110 billion FDIs in 2019,” Lim said.
Nonetheless, Lim noted that businesses in the country still remained optimistic in the country. Even with the pandemic, he said, the 2020 PwC–MAP CEO Survey showed 83 percent of CEOs expect the Philippine economy to recover within 1-3 years, 59 percent of them are confident about their organization’s revenue growth prospect over the next 12 months, and 90 percent of them are confident about their revenue growth over the next three years.