MANILA, Philippines — The Philippines should expedite the passage of key reform measures that would boost foreign direct investments (FDIs) and aid the country in its long-term recovery from the pandemic, the World Bank said.
In a briefing with members of East Asia and the Pacific (EAP) press, World Bank president David Malpass said recovery across countries and sectors in the region remains uneven due to the limited access to COVID-19 vaccines, especially for developing economies such as the Philippines.
Apart from vaccines, however, Malpass underscored the importance of legislative changes that are being considered to attract more FDIs.
“I think there are things that the Philippines can do now that will make it more attractive to investments and that will help with the recovery process,” Malpass said.
“A key part of how countries develop is how to allow businesses to be created and the Philippines has made progress on streamlining some of those processes that’s been important,” he said.
The government has been pushing for amendments to the Foreign Investments Act, Public Service Act and Retail Trade Liberalization Act.
Changes in these laws would ease restrictions on foreign businesses, introduce changes to the definition of public utilities, and allow greater foreign investment in telecommunications and transportation.
It would also reduce the minimum required paid-up capital for foreign retailers. All these three measures have been certified as urgent by President Duterte.
The Legislative-Executive Development Advisory Council originally targeted to have the three measures passed by the end of last month but no such progress has been made.
“I think there’s still a strong reform agenda that is being implemented, we have supported some of these both in the financial sector and on reforms to do with competitiveness and all of these are important to make some of the structural changes and address impediments to long term growth,” World Bank EAP regional vice president Victoria Kwakwa said.
Net inflow of FDIs to the Philippines declined by almost 25 percent to hit a five-year low of $6.54 billion in 2020 from $8.67 billion in 2019. This was the lowest since the $5.64 billion recorded in 2015.
As of April 2021, FDIs more than doubled to $679 million amid positive investor sentiment on the country’s macroeconomic fundamentals and strong growth prospects.
Further, the Washington-based multilateral lender disputed forecasts that the Philippines is at risk of becoming a basket case this year due to lingering economic woes.
To become a basket case means that the country’s economy and financial standing are in a “seriously bad taste.” It can also be defined as being in a hopeless condition.
“That’s not how we see it all even as the country has been strongly hit by COVID-19. I think with the vaccination that’s in process and some of the reforms that are ongoing, we see a rebound in 2021,” Kwakwa said.
“But, the Philippines will need to continue to address some of the structural constraints to long term sustainable growth but we don’t see it as a potential basket case at all,” she said.
Further, the World Bank reiterated its call on advanced economies to release supply of COVID-19 vaccines to accelerate vaccination in developing countries.
Malpass emphasized that supply shortages and logistical constraint mean that many countries may not fully vaccinate their population until 2024 even as new variants emerge.
He said rich countries also stand to benefit from the release of supply as it will pave the way for a world that has a stronger economy and less of an environment that causes variation.
“It is very important that vaccination be available broadly in the world including to developing countries because there’s transmission worldwide of the disease,” Malpass said.
“The economic benefits that come from vaccination have a huge return on investment for the countries and the world. It would add percentage points to the GDP growth of countries as their vaccination rate goes higher. The dollar value of having broad vaccination is in the trillions of dollars for the world,” he said.
Data showed that only 12.1 percent of the 7.9 billion global population has been fully vaccinated.
In the Philippines, only 13.1 million doses have been administered since vaccination started in March.
About 3.2 percent or 3.46 million Filipinos have been fully vaccinated while those who were given at least one dose reached 9.66 million or some 8.9 percent of the population.