Philippines 'friendlier to foreign investment under Duterte'Madeinkoreablog
Philippines President Rodrigo Duterte’s rule will help foreign investors shake off anxiety about investing in the country, putting to rest external worries about political instability, says the country’s Department of Trade and Industry Secretary Ramon Lopez.
In his Dec. 6 visit to Seoul for the ASEAN-Korea Center’s Invest Philippines seminar, the secretary sat down with The Korea Times to address how the strong leader’s ruling expedited the country’s war on corruption, which would help foreigners feel more secure about investing.
“The President is a most passionate ambassador of investment promotion, because every time he talks to the business sector, he guarantees investors that he will honor and protect them by fighting corruption,” Lopez said. “That’s the kind of assurance to bring back security.”
Since he took office, Duterte has been “ruthless” in fighting crime, executing many criminals. However, the bloody campaign has created rumors that the country is unstable and dangerous to travel, leading to concern about investment.
“The baseline of the current policies is that having freer trade flow will create more decent jobs for the majority of Filipinos and Duterte has a clear objective on what will benefit Filipinos,” Lopez said.
“For example, we’re not changing policies as far as ASEAN is concerned. We have a free trade area and are trying to expand it to the RCEP. He knows these are things that will improve relationships with other countries.”
RCEP stands for the Regional Comprehensive Economic Partnership, a China-led free trade agreement between Korea, China, Japan, Australia, India, New Zealand and 10 member ASEAN countries.
“Aside from the discipline, the current administration has been employing various socioeconomic policies, Lopez said. “Through that, investors can experience differences such as shortening the processing of many things (related to business).”
President Duterte has set up a 10-point socioeconomic agenda, containing details on maintaining current macroeconomic policies, including fiscal, monetary, and trade policies; pursuing the relaxation of constitutional restrictions on foreign ownership to attract foreign direct investment; accelerating annual infrastructure spending to account for 5 percent of GDP; investing in human capital development by matching skills and training to meet the demands of businesses and the private sector.
“In terms of lowering taxes, we are looking for balanced taxation, by reducing tax leakages and lowering corporate and personal income taxes from 30-31 percent to 25 percent,” the secretary said.
The Philippines’ GDP grew 7.1 percent in the third quarter. In the second quarter it stood at 7 percent, signaling an upbeat start for the administration. In the past two years, the country’s foreign direct investment (FDI) influx has been hovering around $5.8 billion, which Lopez attributed to investors’ strong confidence in the country’s solid macroeconomic fundamentals.
“Also its per capita income is growing and the population is also growing,” Lopez said. “We are at the sweet spot of demographics with more young people employed and becoming a huge consumer base.”
In a recent report, the Korea Center for International Finance assessed that the Philippines’ fast growth contained risks because it was not backed by the manufacturing sector and the country’s FDI might be limited down the road.
More than 60 percent of the country’s GDP is occupied by service sectors, while it depended on imports in terms of capital goods and consumer goods.
The country is also aware of the risks and plans to enhance its manufacturing sector through various programs.
One of them is the Comprehensive Automotive Resurgence Strategy (CARS) Program, designed to build automotive parts. Lopez said the CARS program was expected to create about 200,000 direct and indirect jobs in the industry, and needed new investment in manufacturing parts not available now.
As of May, bilateral trade between Korea and the Philippines stood at $4.05 billion annually.