Pro-foreign investment laws can triple FDI inflows — Pernia

MANILA, Philippines — Foreign direct investment (FDI) inflows into the country can increase three-fold by amending three key investment laws that would ease restrictions on capital from overseas, the National Economic and Development Authority (NEDA) said yesterday.

During the Pre-State of the Nation Address (SONA) economic and infrastructure forum yesterday, Socioeconomic Planning Secretary  and NEDA chief Ernesto Pernia urged Congress to pass the proposed ammendments to the Foreign Investment Act, Retail Trade Act and the Public Service Act.

“The Philippines is the most restrictive country in ASEAN. In Vietnam, for example, 100 percent foreign participation is allowed in practically all areas of FDI,” he said.

“Here in the Philippines, there are so many areas where FDI is only partially open to foreigners...and with those three acts passed and liberalizing the economy, we could really expect much more foreign investment, tripling or quadrupling what we have already achieved,” he added.

Net FDI inflows reached $1.9 billion in the first quarter of 2019, a decline of 15.1 percent from $2.3 billion net inflows in the same period in 2018.

For full-year 2018, net FDI inflows reached $9.8 billion, down by 4.4 percent from $10.3 billion in 2017.

The proposed amendments to the Retail Trade Act seek to ease the equity and capitalization requirements for foreign entrants into the retail sector.

Proposed changes to the Foreign Investment Act include reducing the required number of direct employees for businesses with 40 percent foreign equity and paid-in capital of $100,000 to 15 from 50.

It likewise excludes the practice of professions from restrictions.

Amendments to Public Service Act, meanwhile, propose that all transmission of electricity, distribution of electricity, and water works and sewerage systems shall make up the exclusive list of public utilities.

It likewise raises the foreign ownership limit in public utilities.