MANILA, Philippines — The Philippines is ripe for more US foreign direct investments (FDIs) as recent consecutive reforms in Philippine business laws signed by President Duterte have made doing business in the country easier.
This is according to Jose E.B. Antonio, the country’s Special Envoy to the US for trade and investments, who has spearheaded a series of public-private sector initiatives to invite American companies to set up or relocate their businesses in the country.
Via virtual presentations, Antonio has enlisted the participation of the Management Association of the Philippines, the American Chamber of Commerce of the Philippines, the Semiconductor and Electronics Industry of the Philippines and the Harvard Business Club of the Philippines.
“Conditions that make the country conducive to US investments have come together. As a culture, we are highly adaptable but with new and amended business laws, we are opening the floodgates of opportunities,” Antonio said.
Antonio’s pronouncement comes in the wake of the signing of the amended Public Service Act (PSA), which allows up to 100 percent foreign ownership of public services, such as telecommunications, railways, expressways, airports, and shipping industries as public services.
Other laws that support the government’s push to make the country a hotbed of US investments include Republic Act 11595, also known as the Retail Trade Liberalization Act, which lowers the paid-up capital requirement for foreign retail enterprises and other purposes, setting a single minimum paid-up capital requirement of only P25 million for all foreign-owned retail trade enterprises and lowers the minimum investment requirement per store to P10 million.
Prior to these, the government also signed the Ease of Doing Business Act and Efficient Government Service Act (RA 11032), which makes processing of business permits faster, standardizes the turnaround time for government transactions depending on the complexity of the task, the automation of business registration, among others.
As of now, foreign business groups are waiting for the issuance of the implementing rules and regulations (IRRs) for the new economic liberalization laws.
The US has been historically one of the Philippines’ major investment partners—the Philippine Statistics Authority cited the US as the sixth largest contributor on FDI inflows to the country after Singapore, China, South Korea, Japan, and the Netherlands. US FDI in the Philippines was $6.9 billion in 2019, a 0.3 percent increase from 2018.
However, Antonio said the US could expand its role, what with significant geographic movements of US companies, chiefly their exodus from China.
In 2020, big tech US companies such as Apple, Bose, Dell, Intel, Microsoft, as well as Brooks Running, Hasbro, Skechers, Steve Madden, and Whirlpool have opted to relocate operations in India, Cambodia, and Vietnam.
Meanwhile, the annual Business Climate Survey conducted by the American Chamber of Commerce in China in 2021, presented a scenario of uncertainty for many US companies, with the regulatory environment and sustained air travel restriction among others, making staying in China difficult.
“While our other Asian neighbors have won the initial round of pitches to be the next home of these companies, it is an opportune time for the Philippines to position itself as among equal, if not, better strategic partners of these US corporations,” Antonio said.
“Communications-wise, we are at an advantage,” Antonio said.
The National Economic Development Authority in 2018 said “the Philippines is expected to be the last major Asian economy to benefit from the demographic dividend between the years 2025 and 2070.”
The chance for relocation of US companies in the Philippines also coincides with infrastructure continuing to be a major push by the administration, with its Build Build Build program that the new administration may continue.
Tariff laws have also become friendlier with the CREATE Act (RA 11534 or the Corporate Recovery and Tax Incentives for Enterprises) which effectively reduced corporate income tax rate from 30 to 20 percent for large corporations.