Louella Desiderio – The Philippine Star
February 13, 2022 | 12:00am
The Delegation of European Union to the Philippines and European businesses want to see the enactment and implementation of amendments to the Public Service Act (PSA) and Foreign Investments Act (FIA) to allow the country, which remains a secondary market relative to its Southeast Asian neighbors, to entice more investors from Europe.
Maurizio Cellini, first counsellor and head of trade and economic affairs of the Delegation of EU to the Philippines, said during the launch of the Doing Business in the Philippines (DBIP) 2022 publication of the European Chamber of Commerce of the Philippines (ECCP) it was an opportune time for the Philippines to adopt reforms and policies that would lead the country towards resilient and sustainable recovery.
“In this respect, we have to recognize important policy reforms are ongoing in the Philippines, which when and if fully implemented, will be beneficial to businesses and investors. In particular, we want to see amendments to PSA and FIA come to fruition now and enacted into actual laws,” he said.
Amendments to the PSA which seek to allow up to 100 percent foreign equity in sectors such as telecommunications, as well as air carriers, domestic shipping, railways and subways have been ratified by Congress and would just need President Duterte’s signature to become law.
FIA amendments which also seek to promote foreign investments in the country, have likewise been ratified by Congress.
While the Philippines is seen as a fast-growing economy, Cellini said the country only attracts on average only four percent of the total EU foreign direct investments (FDI) in the Association of Southeast Asian Nations (ASEAN).
He said latest available data showed EU’s FDI stock to the Philippines grew by eight percent to €14 billion in 2019.
“The Philippines is a fast-growing economy but the fact remains that for too long, EU investors and entrepreneurs have seen the Philippines as a secondary market compared to other ASEAN markets,” he said.
He said adoption and implementation of reforms are expected to improve the situation and make the country a more attractive destination for EU investors.
ECCP president Lars Wittig said when the amendments to the PSA and FIA are signed into law, the group expects billions in investments to come to the country.
He said many European companies came to the country in the past considering to invest in the telco sector, but did not pursue it due to the foreign ownership limit.
He said the amendments would allow the firms to come back and pursue their investments.
Aside from the amendments to the PSA and FIA, Cellini said they also wish to see the full implementation of the Customs Modernization Act, Ease of Doing Business Act, Corporate Recovery and Tax Incentives for Enterprises Act, and the newly enacted amendment to the Retail Trade Liberalization Act.
In terms of trade, he said EU-Philippines trade is relatively smooth, but there are lingering non-tariff and market access issues especially in the agri-food sector including concern over the certification of meat and vegetable exporters, as well as the ban on export of pig meat from EU countries partially affected by African swine fever.
“The EU Delegation is committed to work on these issues and welcomes the cooperation with member state embassies, industry representatives and the EU Chambers for joint market access and advocacy effort with the Filipino authorities,” he said.
Eurostat data showed that in the January to November 2021, EU imports from the Philippines grew by 22 percent to €7.2 billion, while EU exports to the Philippines rose by 15 percent to €6.1 billion.
He also said around two billion worth of Filipino products enjoyed preferential access to the European market under the Generalized Scheme of Preferences Plus (GSP+).
While data on the Philippines’ EU GSP+ utilization rate for full year 2021 is not yet available, he said it was likely the number would be close to the 2020 level when the GSP+ utilization rate was at 75 percent.
The Philippines is a beneficiary country of the GSP+ which allows 6,274 products to enter the EU at zero duty.
Cellini said a new GSP regulation would be in place beginning Jan. 1, 2024, which may involve updates in the number or in the type of conventions that will be necessary to be respected by countries to be eligible for the trade preference scheme.
Wittig said the ECCP remains committed to working with the government to further facilitate ease of doing business and it is in line with this aim that the group launched the new edition of the DBIP with KPMG Philippines.