FDI growth: The real challenge

As I prepared this piece, the deafening drums have started to roll and the energizing beats have began to tickle everyone’s foot and buttock. These beats and drums are so inviting and are dominating in every nook and cranny of the city’s conspicuous places.  With its dominance, every tourist (foreign or domestic) may think that this is it, the Sinulog Mardi Gras. Yet, this is just the second and final installment of the Sinulog sa Kabataan.  Truly, a lot more can be expected as the celebrations and competitions heighten towards Sunday.

As usual, the day after, apart from judging how successful the celebrations have been, among the most talked about development will be how a contingent did it for the big win in the free interpretation category or how the perennial winner on the Sinulog-based award took perpetual hold of the title.  Pondering on these scenarios, we can only imagine how thorough their preparations were.  Or, how unfathomable the sacrifices made by every member of these contingents have been.  All of these preparations and sacrifices made solely for one goal, to take the plum.

The same can be said of the global economies.  At the advent of globalization, every nation in the globe prepared for a long grind towards prosperity and stability by trying to take a bigger share of the global economy’s pie.  In fact, every facet is fought, including territories (like China claiming sole ownership of the China Sea), just to gain huge advantage.

Today, one of the tightly fought areas is luring foreign direct investments (FDIs).  FDI, as Wikipedia puts it, “is direct investment into production or business in a country by a company in another country”.  We don’t have to go that far in understanding this.  Just visit the two (2) Mactan Export Processing Zones and anyone will know how enormous its contribution is to Cebu and the country’s economy.

However, despite these FDIs presence, weighed against that of other key cities in Asia, ours will surely pale in comparison.  For one, our October, 2012 FDI was just half the amount compared to the same month in 2011.  Though, in aggregate, we improved this year compared to last year by having a net inflow of US$1.131 billion (2011-US$853 million), still, records in 2011 will show that we are miles behind our Southeast Asian neighbors like Singapore, Indonesia, Thailand and Malaysia which registered US$617.922 billion, US$185.804 billion, US$146.12 billion and US$114.555 billion, respectively.  The main reason-the apparent lack of incentives.   

True enough, our constitution limits foreign ownership to 40% in some undertakings.  Most of these undertakings usually involve natural resources and public utilities where foreigners are either restricted or banned.   While we may brag about what we have attained right now having the same old policies or constitutional restrictions, it cannot be denied that other countries that are already better than us will continue to give more. 

Thus, if we can’t remove some restrictions, we must consider other changes.  Probably, this can come in terms of ownership of real properties (such as, land for a manufacturing plant and residence).  With this incentive, it doesn’t mean though that there shall be no restrictions.  While we should allow them to own real properties, the lots’ present condition, its use and sizes shall be regulated.

For instance, let us take the case of Singapore.  Despite its limited size (about 15% of Cebu island), it allows foreigners to own real properties.  Subject to the approval of the country’s Minister of Law, foreigners can acquire such properties as vacant residential land.  Consequently, most investors stay in Singapore longer, if not, forever (like facebook co-owner Eduardo Saverin).

Indeed, there seemingly is an undying interest in our country. Unfortunately, however, what we are trying to offer are sadly those that they don’t need.  What is important now is for all the players (including our lawmakers) to consider amending certain laws to keep abreast with the fast-changing environment brought about by the irreversible journey to globalization.   In this regard, the possibility of foreigners owning real properties must be given due consideration.

For your comments and suggestions, please email to [email protected].