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Easing foreign ownership likely to encourage FDIs

Carlo S. Lorenciana (The Freeman) - July 7, 2016 - 12:00am

CEBU, Philippines - Easing restrictions on foreign ownership is likely to encourage more inflows in the medium-term.

This is one of the highlights pointed out by Singapore-based DBS Bank in its research entitled "Philippines: Duterte's Game Plan".

"To create more jobs, the Duterte’s administration promises to be pro-business. There are plans to further liberalize the economy by adjusting the cap on foreign ownership of local companies from 40 percent to 70 percent. Limits on property land-lease could also be said to be lifted to 40 years from 25 currently," the regional lender said.

This is potentially significant, it added.

While foreign direct investment increased several folds during Aquino’s term, DBS stressed it remains low compared to the rest of the region.

DBS note that about 60 percent of FDI applications over the past five years have been directed in the manufacturing sector.

"We reckon this high interest in the sector will continue. Manufacturing is a key sector that the Duterte administration will focus on to absorb the growth in labour force. It would also fulfill the ambition to diversify the economy from an over-dependency on services," the foreign bank said.

It further pointed out that Duterte’s game plan is positive for the longer-term growth outlook but delivery is key.

"Until policies are implemented, it’s all theory," the bank said.

As Duterte starts his first year in office, all eyes are on to see whether he can deliver his plans and how his first year pans out. (FREEMAN)

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