EDITORIAL - Closed for business

Apart from displaced workers, there is another sector that needs reassurance from the government as the unprecedented shutdown and cleanup of Boracay gets underway: investors.

Operators of several establishments in Boracay have lamented that they were given all the necessary clearances and permits to open and operate their businesses, a number of them for many years now. Suddenly, at the height of the travel season, they are being shut down, with several facing the prospect of being closed permanently.

Tourism can be a major engine of economic growth. Countries that develop their tourism industries create jobs even in the countryside, promoting inclusive growth and reducing people’s need to find jobs in cities or abroad. Done right, tourism helps preserve the environment as travelers increasingly pick eco-friendly destinations.

Developing tourism, however, requires significant investments, not just in infrastructure provided by the government but from the private sector. Hotels, transportation and telecommunications facilities, even sewerage and sanitation systems – private investors are needed for these projects. And whether Filipino or foreign, investors want a measure of reliability in project approvals given by the government.

The Philippines is notorious enough for weak business regulation, a malleable judiciary, red tape and corruption, crony capitalism, and contracts even with the government that cannot be enforced. In global surveys on ease of doing business, the Philippines has consistently ranked low. The result is clear in levels of foreign direct investments, with the country lagging behind the four other original founding members of the Association of Southeast Asian Nations.

The latest developments in Boracay can spook investors. The Philippines needs investments to create jobs, and the administration needs investors for its ambitious Build Build Build infrastructure program. Other Asian countries are competing aggressively for those investments, and these countries do not shutter businesses arbitrarily.

After Boracay, the government must persuade the investment community that it’s safe to put their money in the Philippines. Boracay is closed for business. The message shouldn’t reflect on the rest of the country.