Spanish director of trade and investment of the Ministry of Industry Oscar Via Ozalla said while he did not want to criticize the Philippine government, it was important to point out that its efforts were not enough to attract greater investment into the country despite the Arroyo administration’s fiscal and economic reforms.
"I know you have made steps in the right direction. They are still not enough because Spanish companies need more," he told a forum Wednesday here with Trade and Industry Secretary Peter Favila and members of the Spanish business community.
Favila admitted that Spanish officials and businessmen cited problems on infrastructure and the bureaucracy as reasons why investors were looking to other countries in the region instead of the Philippines.
"They want a friendlier environment for business. We do need to do a lot of catching up in the region (when it comes to infrastructure)," Favila told reporters accompanying President Arroyo in her European trip.
Ozalla also cited the six-month delay in the passage of the government’s 2006 budget. "Your country still has not approved its budget for this year. You’re basing yourselves on last year’s budget," he noted.
Ozalla said non-approval of this year’s budget might delay the government’s much-needed investments in infrastructure as well as improvements in social services.
Congress failed to approve the country’s 2006 budget before adjourning early this month. Mrs. Arroyo said she did not want large cuts in the over P1-trillion budget and would veto the measure if her earmarked allocations for infrastructure and other pro-poor projects were not restored.
As regards bureaucratic red tape, Favila said Mrs. Arroyo had sought to establish a "one-stop shop" to attend to all the requirements of businesses.
"We continue to review our processes and the President will issue another executive order to further reduce delays in the entry of investments," he said.
Favila said the concerns of businessmen were not primarily about uncertain political developments but about the system of government itself.
"I was a little concerned, they must just raise political issues, and I was thinking if ever they did, I would just say, ‘I’m sorry but the economic team does not engage in politics,’" he said.
"For an investor to pay so much attention to politics does not make sense. They want to be assured of the right environment for their businesses to grow. Anyway, anywhere they go there are political issues," he said.
Favila said the country should be aggressive in marketing the Philippines and find new strategies as Vietnam and China were giving away land.
"We cannot do that without amending the Constitution. But we cannot just watch. We have to do something," he said.
"For example, the cases of electricity distribution, the legal framework in other countries such as Malaysia… (are better, that is why) the investments are not going to the Philippines," Ozalla said.
"I’m not criticizing, I’d like to make that clear, but we have a very broad margin in which we act. We have to realize there must be a return of investment into Spanish companies and we have to analyze the situation. The Philippine government has to find the right framework and we analyze the result," he said.
Ozalla said the Philippines must work double-time to get more investments from Spanish businessmen who are now searching globally for places where they could invest their money.
They are painfully aware that despite fiscal reforms such as the additional taxes, a considerable portion of the Philippine government’s budget would always go to the payment of debts and interests.
Ozalla said the Spanish government would monitor developments in the Philippines to see if its potential materializes, especially with reforms already introduced by the Arroyo government.
He said the Spanish side would like to have an increased presence in the alternative and renewable energy sector, infrastructure and telecommunications industries.
"We clearly are in favor of helping Spanish companies become more present in the Philippines and help it become more competitive," he said.
Favila said he told Spanish businessmen that it was a pity the Spanish and Philippine governments did not have prosperous economic ties despite the long history they shared.
"But I told them this is the best time to invest because the Arroyo administration is very responsive to the needs of the investors," he said.
Favila said despite the concerns, the meetings he had with the Spanish businessmen were encouraging. "We were able to challenge them, (I told them), ‘You are our mother country, you seemed to have forgotten your daughter country.’"
He said various areas of investments were discussed such as information technology, mining, defense system and technology, waste management, water treatment, tourism and even traffic systems.
Mrs. Arroyo arrived in Spain yesterday, the third and last leg of her official trip to Europe that included stops in the Vatican and Italy.
Corruption, red tape, poor infrastructure and the shaky political scene have been blamed in the past for relatively small foreign investment in the Philippines.
Mrs. Arroyo is being hounded by electoral fraud allegations and has drawn flak for her plan to amend the Constitution and shift to a parliamentary system of government.