Get act together on investments

The Philippine government tried to sell the country last week at a gathering of potential Japanese investors in Manila organized by the Japan External Trade Organization (JETRO). Japanese companies are now actively looking for potential areas to put up factories in the light of a yen that seems to be forever getting stronger and potential problems with power availability as they have shut down a number of nuclear power plants.

About 300 participants representing a variety of companies attended the seminar. About 100 of the firms were from Japan, another 100 were Japanese companies based in the Philippines, while the rest were local Filipino corporations.

At the end of the day-long seminar, Toru Tsuji of the Japan-Philippine Economic Cooperation Committee urged the Philippine government to first address its power supply and energy costs, improve logistics facilities, enhance taxation policies for foreign investors, and ensure law and order to encourage more private investors to participate in projects. But he reportedly recognized that the Philippines has huge potential compared with some of its Southeast Asian neighbors because of its large, hardworking and English-speaking labor force.

PPP Center executive director Cosette Canilao gave the usual tepid response that can be expected from government bureaucrats. She said Manila would examine the issues Tsuji raised, but maintained that there is already “huge interest” from the Japanese private sector in the projects.

Examine the issues? What’s to examine? Do something quick! We all know for so long that our power rates are uncompetitive, power availability is sometimes iffy and in the case of Mindanao, long periods of power outage this summer. We have been talking about improving our logistics facilities for quite a while (attention: Mar Roxas), we know our tax policies vis-a-vis foreign investors have to be fixed and our law and order sucks not just for foreign investors but for locals too.

Mr. Tsuji was being diplomatic when he said we have huge potentials. But we know that too. We have been a country of immense potentials for decades but we have been eating the dust of countries and city states with a lot less of those potentials. Potentials mean nothing until we learn the secret of converting those potentials to real gains for the economy and our people.

We have also been forever tinkering with our investments incentives rules. It seems the problem is not that we don’t have enough incentives because we even have overlapping incentives that allow investors to double dip on incentives so to speak. But investors not only overlook us, those already here even leave because we have failed to attend to things that matter to investors… the stuff that Mr. Tsuji pointed out.

Now we hear the Department of Finance intends to remove incentives given to foreign and local investors. Finance Secretary Purisima wants to convert PEZA into an incentive granting body and to limit the role of the Board of Investments to purely promotional, thus eliminating redundancies between the two agencies. For the local companies, subsidies, which are more measurable, will be given instead of incentives.

Well… it is time to clean up our act on incentives but on top of our “to do” list is the need to attend to the concerns of Mr. Tsuji. Sure… the success of PEZA under Lilia de Lima, its dynamo of a head, probably puts it in a better position to make decisions on incentives to investors particularly in manufacturing. PEZA at least, has hands on experience on what works on the ground.

The Board of Investments (BOI) has been proven inept through the years… somewhat theoretical in approach to incentives and no real feel of how to keep investors happy. The BOI is good in issuing press releases and its new role as a promotions agency is probably well suited to the only thing it is able to do.

Keeping investments already here to stay here is already a big task that we aren’t too successful in doing. Because of this dismal track record, I don’t want to even talk of attracting those not yet here.

Shortly after the local car manufacturers outlined their plans to keep local production here, Ford and Honda announced they are giving up on us. They are stopping the assembly of some of their models here and just import completely built units from Thailand.

What happened to the car industry is a good example of the ineptness of government in handling investors. After several attempts to put one car development program after another over several administrations, Honda and Ford just got fed up. Of course Thailand has a lot more advantages over us, mainly its much larger vehicle market. But if Ford and Honda had more confidence in our government’s ability to deliver on promises, they would probably not leave in a huff.

I guess the problems of investors here are largely in the realm of conflicting government policies. In the car program, we couldn’t even assure them that we would control smuggling of used cars from so called free trade zones that is cutting an already small market even more. Indeed, our policy on used cars, even those legitimately imported, had been unclear. And BOI doesn’t have enough clout to influence other government agencies.

And we are defeated even before we start. The Aquino administration announced rather modest investment targets, compared to our regional neighbors.  Trade Undersecretary Cristino Panlilio announced that over the next two years, the country’s investment promotion agencies or IPAs are expecting $3 billion worth of pipeline investments or those that cut across sectors.

That’s small potatoes compared to Vietnam that announced a target of US$15-16 billion worth of foreign direct investments or FDI in 2012. According to Vietnam’s Foreign Investment Agency, the amount of FDI actually brought in last year was $11 billion, or equal to the 2010 figure.

This is the worse part… we have set the bar so low but even at that, we are not even sure we will make it.

Stock market

Two weeks ago I attended a stock market briefing of PhilEquity where they were talking of a Phisix target of 5,300 by year end. Last Monday, Phisix was already at 4,943. I thought PhilEquity was being too bullish. It is turning out they are actually quite conservative.

The market being what it is, I get e-mails asking advice on how to invest in the market. Well, the stock market is a dangerous place to be if you don’t know what you are doing. Even in my own case, I usually consult more experienced folks before I risk a single hard earned peso.

One of those friends who I respect for having a good knowledge of the market is Business Mirror columnist John Mangun. John’s one American who has lived here long enough to be no stranger to our ways. He has long ago adopted our country as his own. He has actively analyzed and traded in the local stock market since 1989.

John is holding a one day seminar on how to invest in our local stock market in Cebu on Saturday March 3. Entitled “Your Money: Preservation and Profits a Stock Trading Seminar”, it will be held at the Golden Prince Hotel & Suites on Acacia st., Corner Archbishop Reyes Avenue.

 According to John, he will teach participants how to make and not lose money in the stock market by understanding how it truly works. He will also show how a professional trader makes profits from investing on the Philippine Stock Exchange.

Says John: “The one lesson I have learned in more than 30 years of stock trading is that you must have a trading strategy and then you must trade your plan. But where do you get The Plan? Your stockbroker’s hot tips? Your brother-in-law’s highly placed connections? Your gut feelings?

“Technical analysis is intended to provide us with the price trends of the broad market and also individual issues. More importantly, it helps define price entry and exit points for profits and exit prices when the price trend changes direction.”

John is a believer in the Philippine stock market, as he constantly points out that it was one of the top performing exchanges in the world in 2011. Now as we move farther into 2012, he thinks the Philippine stock market is currently the BEST total performing market on the planet.

Hopefully, John will conduct his seminar in Manila soon too.

Email [email protected] for more details.

Lotto

One disappointed lotto non winner was overheard to exclaim: All I want is a chance to prove that money means nothing to me!

Boo Chanco’s e-mail address is [email protected]. He is also on Twitter @boochanco