Government review of water deals to affect FDI inflows — MAP

MANILA, Philippines — The government’s review of the water concession deals is seen to worsen the decline in foreign direct investments (FDIs) as regulatory risk affects the country’s attractiveness to investors, the Management Association of the Philippines (MAP) said.

MAP’s new president Francis Lim said during the group’s 71st inaugural meeting yesterday that recent events such as the review of the water concession agreements affect the current perception of the country as an investment destination.

The government is offering a new contract to water concessionaires Maynilad Water Services Inc. and Manila Water Co. Inc. to make sure there are no onerous provisions.

Citing Fitch Solutions, Lim said the country is now seen as having the highest regulatory risk following the review of the water contracts.

“That affects perception,” he said.

As it is, the country’s FDIs have been going down.

From $10.3 billion in 2017, FDIs to the country slid to $9.8 billion in 2018. Lim said FDIs are estimated to go down further to $6.9 billion in 2019.

The country’s FDIs are also small compared to its peers in Southeast Asia such as Vietnam’s $20.4 billion and Indonesia’s $24 billion last year.

“Unless we in the Philippines shape up, foreign investors will view us as an unworthy investment destination and they might rather put their money in our Asean (Association of Southeast Asian Nations) neighbors,” he said.

He said among the factors investors consider in pouring in funds in a country is ease of doing business.

As part of efforts to improve doing business in the country, he said MAP is partnering with the Department of Trade and Industry (DTI) in its efforts to improve the country’s competitiveness.

In particular, MAP would take part in the DTI’s Cities and Municipalities Competitiveness Index which ranks the cities and municipalities  based on an overall score using four pillars: government efficiency, economic dynamism, infrastructure, and resilience.

The higher the score, the more competitive the local government unit (LGU) is.

“Ease of doing business should not just be addressed at the national level but also the local level,” Lim said.

He said MAP would be holding dialogue with LGUs where most of its members do business.

MAP is also looking to increase its membership, particularly by getting younger individuals in the organization to get fresh ideas and prepare young individuals to better lead businesses and the country.

Lim said MAP is targeting to have members aged 50 or younger to make up not less than 20 percent of the total membership.

At present, MAP has 1,034 members.