MARCH 1, 2013

NR # 3030

Belmonte draws route to entice more direct investments into the country
Congress is committed to the removal of structural impediments to investments and encourages aggressive programs to create quality employment opportunities for the people to arrest the persistence of inequality and poverty, Speaker Feliciano Belmonte, Jr. stressed before the latest forum of foreign business leaders. Although the current macroeconomic conditions are laudable, structural impediments to investments and job creation still persist. Unemployment and underemployment remained a big hurdle, thus, the persistence of inequality and poverty, Belmonte explained. The House leader was addressing the Arangkada Philippines Anniversary Forum under the theme Realize the Potential, held on February 26th at the Makati Shangri-la, and organized by the Joint Foreign Chambers. Citing the growing recognition that the Philippines could be a growth leader among larger emerging economies, the Speaker said the current state of Philippine reformation is clearly intended to achieve sustained and inclusive growth. Indeed, the present is an opportune time to reflect on our journey and affirm our commitment to the pursuit of continuing structural reforms towards sustained and inclusive growth, he said. He underlined that the key elements of inclusive growth, which include job creation and improvement in the quality of employment. But how do we boost employment? Basic economics dictates that to increase jobs we must boost investments. There is no going around that, the House leader said. The House leader clarified that investments do not mean hot money that has been pouring in but direct concrete investments that go, for instance, into the manufacturing sector. Multilateral agencies are of the consensus that the Philippines needs to focus investments on modernizing agriculture, reviving manufacturing, and developing tourism, considering these sectors high labor absorption and high multiplier effects, he pointed out. Confident of the continuing support of Arangkada Philippines, Belmonte then laid down three tasks designed to increase direct investments in the country.

The first, he said, is to enhance firm competitiveness. We should seriously review the EPIRA law and its implementation. A stable power supply and competitive power rates are important to the growth of local manufacturing that provides opportunities for majority of unskilled and rural workers. We should also allow a more liberalized commercial aviation industry and increase tourist arrivals through an Open Skies Policy. We should rationalize the charters of the Philippine Ports Authority, MARINA, and the Civil Aeronautics Board to avoid regulatory capture and conflict of interest in the operation and management of public utilities, all leading to lower transportation costs, he added. The foregoing, he further pointed out, should be complemented by the Customs Modernization and Tariffs Act to upgrade other countrys customs facilities and processes in line with the ASEAN integration envisioned for 2015. The second is to improve the business environment and regulatory governance, noting that in the 2013 Doing Business (DB) report of the International Financial Corporation (IFC), the Philippines ranked 138 out of 185 countries, lower compared to the last years 136th place out of 183 countries. The Philippines posted lower scores in seven of the ten indicators. These include starting a business (161st from 158th), registering a property (122nd from 120th) and protecting investors (128th from 124th), Belmonte pointed out. Ultimately, the Speaker stressed that we cannot discuss boosting investments without confronting the economic restrictions of the Constitution. Congress should be able to exercise its power to review and amend restrictive regulatory laws such as the Foreign Investment Negative List, to make the country attractive for foreign investments with genuine national interest in mind, he stressed. Finally, Belmonte said, the third task is to sustain macroeconomic stability, which involves further improving economic fundamentals by maintaining fiscal space and enhancing the efficiency of public spending. Among other concerns, the Speaker said we have to put our acts together in rationalizing fiscal incentives that have been costing the government around two percent of GDP and yet, have very little to show in terms of actual investments. Citing a shrinking time frame for the 15th Congress, the House leader pointed out that vital reform measures already in advanced stages of the legislative process could be strongly reconsidered by the incoming 16th Congress. (30) dpt