Investors cautious on negative news, say foreign groups

MANILA, Philippines - Negative news is bad for business, and what is bad for business could spell doom for the economy.

The “laglag-bala” or bullet planting scam in the country’s airports has not yet made a dent on the Philippine economy yet, but it poses the threat of wounding the country’s attractiveness as an investment destination if it is not addressed immediately.

“Investors are certainly not amused and will question the ability of the Philippine government to deal with issues affecting business,” European Chamber of Commerce of the Philippines (ECCP) executive vice president Henry Schumacher told The STAR.

The Philippines continues to be recognized as one of the top-in-mind attractive destinations among investors globally due to its sustained robust economic growth rates, according to foreign business groups in the country.

The country’s economy improved six percent in the third quarter of the year, the third fastest growth in Asia next to China’s 6.9 percent and Vietnam’s 6.8 percent.

Last year, foreign direct investments (FDIs) in the country even soared to a record high of $6.201 billion from $3.737 billion in 2013.

FDI inflows this year, however, have plunged. FDIs declined 35 percent in the seven-month period from a year ago.

Although the bullet planting and allegations of extortion at the Ninoy Aquino International Airport (NAIA) has nothing to do with this downtrend yet, it may have implications moving forward.

“I do not think that, at this point, the previous incidents would in a big way affect investor confidence. If allowed to continue, however, this type of incident may contribute to damage the security reputation of the Philippines, which is one of the factors potential investors for sure will look at,” Nordic Business Council Philippines (NBCP) president Bo Lundqvist told The STAR.

NBCP promotes and facilitates trade, commerce, industry, and investment between the Philippines and the Nordic (Denmark, Finland, Iceland, Norway, Sweden) and Baltic (Estonia, Latvia, Lithuania) countries.

The “laglag-bala” or “tanim-bala” scam at NAIA has gained prominence not only in the country, but even in other countries in Asia and the United States, placing fear and concern on both local and foreign travelers alike.

Lundqvist said the Philippines’ reputation as a safe and easy place to do business should be protected, if the country wishes to continue enjoying its status as an attractive investment destination.

In the World Bank’s October report gauging economies in terms of ease of doing business, the country’s ranking dropped six notches to 103rd from last year’s 97th spot across 189 economies.

Schumacher said aside from the Philippines’ reputation, tourists, overseas Filipino workers and business travelers are the ones currently suffering from the prevalence of the bullet planting modus.

In terms of sector, foreign business group executives said it is obviously the country’s tourism industry that would take the biggest blow should the scam continue and remain unaddressed.

“If this catch on further international press, most probably if the incidents target foreign arrivals, it will for sure affect the tourism industry. This industry is volatile and potential security threats can immediately cause cancellations of large number of incoming tourists for a long period of time,” Lundqvist said.

The tourism sector is one of the bright spots seen in further expanding the Philippine economy.

The contribution of the tourism industry to the economy was estimated at 7.8 percent last year and is currently the third largest dollar earning industry of the Philippines next to semiconductor and business process outsourcing industries.

But if there is any consolation for the country at present, it is that the bullet planting modus has yet to make its impact on the local tourism industry.

 “I did a quick survey of lots of APEC guest and only about one third even knew about it and that third, while thinking it was creative and a bit funny or strange, certainly didn’t think it was a headliner and didn’t understand why it kept making news,” American Chamber of Commerce of the Philippines executive director Ebb Hinchliffe said.

“There has been a limited number of incidents of which only a few have involved foreigners. I do not think that at this point, these incidents will bring harm to the Philippine economy. Neither do I think it reflects on the majority of airport workers in the Philippines. However, if it is not swiftly addressed by the government, it may create further bad press for the Philippines,” Lundqvist added.

Department of Tourism (DOT) assistant secretary Art Boncato Jr. assured the DOT would extend all efforts to work with all sectors to ensure guests are accorded the kind of hospitality the Filipinos are celebrated for.

Boncato said the country is now pushing towards exceeding the five million mark in foreign arrivals by the end of the year.

“Things are looking up with our Visit the Philippines Again 2016 tactical campaign. The DOT’s mandate is to grow tourism because it is about providing food on the table of many communities who rely on it,” Boncato said.

Foreign business groups are now calling for the immediate solution to such extortion scheme which has been allegedly targeting migrant workers and tourists.

Schumacher said the modus should have been stopped and eradicated the minute it became known.

“First impressions for tourists and visiting businessmen last,” Schumacher said, urging the government to replace the management of NAIA to solve the issue.

“That management cannot even provide taxis. If you arrive at Terminal 3 in the late afternoon or early evening, there are long lines of passengers waiting for transport. Of course, you can get a taxi for three times the normal rate – with official receipt,” he said.

For Lundqvist, he said it is important for the government to conduct a proper investigation into the matter, with the objective of finding the perpetrators and use the full force of the law to sentence them.

“If the Philippine government can resolve the issue in a transparent and permanent way, I believe it will not cause significant harm,” he said.

“I would also like to see the government enforcing transparent security measures in place at all airports, preventing airport staff from at any part of the airport harassing passengers. Perhaps added to that, airport staff may need education in customer service and their important role as first line representatives of the Philippines as foreign travelers arrive here,” Lundqvist added.