Good governance attracts infra, supply chain investments

MANILA, Philippines - Developing countries including the Philippines can look to good governance as a means of attracting foreign investments in infrastructure and supply chains crucial to enhancing their export performance.  

This recommendation was made by Andrew Heulin, consultant for the Business and Trade Policy Section of the Geneva-based International Trade Centre (ITC), in a seminar recently held here organized by the Universal Access to Competitiveness and Trade (U-ACT).   

Heulin said predictability, accountability, transparency and enforcement of domestic policies are among the policy conditions for investment.

He cited examples of how to improve governance, including clear policies and a legal framework for investment, anti-corruption instruments and measures, dispute resolution mechanisms for investors and timely disclosure of information on changes in the investment regime. 

Heulin stressed the need for these countries to provide globally competitive policy conditions to lure more foreign investors.

To this end, efficiency-seeking manufacturing and services look to liberal currency regime, open trade policy, effective trade facilitation and competition policy, among others, he said.

He added the non-discriminatory treatment of foreign investors against domestic ones is likewise imperative.

Moreover, Heulin underscored the importance of foreign investment in export growth. This provides access to efficient global supply chains, service providers and technology know-how as well as outward investment.

He cited the Philippine business process outsourcing (BPO) service exports case study.

In contact center, transcription and animation categories, foreign equity participation to total equity ratio ranged from 96.5 percent to 100 percent in 2007-2008.

Heulin said the contribution of BPO services exports to the country’s gross domestic product (GDP) reached less than four percent in 2008.

This made the BPO sector as driver of Philippine services exports on the back of investment regime that is relatively open, provision of investment incentives and low operation costs resulting from the liberalization of the telecommunication sector.