Key Challenges in Philippine's Trade and Investment Sectors
Nordic Business Council Philippines (NBCP) issued its annual report on Philippines today. The council pointed several issues in trade and investment sector in Philippine. The issues is pulling back the country's ability to reach its full potential in attracting foreign direct investment.
NBCP is a registered non-profit organization that promote and facilitate trade and investment for Nordic and Baltics countries in the Philippines. NBCP operates in trade, commerce, industry, and investment sectors for business and investment from Denmark, Finland, Iceland, Norway, Sweden, Estonia, Latvia, and Lithuania operating in Philippines.
Established in 2012, the council aimed to serve Nordic business community in Philippines and help Nordic businesses to invest in Philippines. NBCP also closely cooperated with chambers of commerce and business organizations, including European Chamber of Commerce of the Philippines, Philippines Norway Business Council, and also Philippines-Finland Business Council.
In its 2016 annual report, as quoted by Philippine Star, NBCP noted key challenges in Philippines trade and investment sectors. The challenges have hindered the country to achieve full potential in attracting foreign investment and international trade. Those challenges are economic restrictions, poor infrastructure and bureaucracy.
Regarding economic restriction, in 1987 constitution, Philippines limited foreign participation in several industries. In the report NBCP said, "Take for instance Art. II, Sec. 19 that mandates a self-reliant and independent national economy effectively controlled by Filipinos, which paves the way for several government regulations, laws, and orders that restrict foreign investors. For example, it allows only 40% foreign equity share in mining, agriculture, forestry, and transportation related undertaking while zero percent foreign equity share in media."
Other challenges are poor infrastructure and bureaucracy. NBCP said Philippines has been under invested for more than 10 years in infrastructure development, which inhibit the country to achieve potential economic growth. While in bureaucracy, the complex and repetitive procedures in obtaining business permits and licenses have discouraged foreign investors.
Meanwhile overall econnomy sectors in Philippines is strong as inflation remains low. In regardto this matter, Philippine Central Bank, Bangko Sentral ng Pilipinas decided to keep its key interest rate at 4%. The decision was announced last week on March 23.
"The monetary board's assessment of manageable inflation outlook and robust growth conditions continue to support keeping monetary policy settings unchanged," Central Bank Governor Amando Tetangco told a media briefing as quoted by Nikkei Asian Review.
The government expect to see around 7% growth in economy in 2016, higher than last year's 5.8%. Analyst in Scotiabank reported as Reuters reported, "Economic momentum in the Philippines is solid, driven by private consumption and investment."
A strong growth in economy is expected in 2016 with the low inflation and higher government spending. Nevertheless, as NBCP noted in its annual report, there are still challenges to overcome to boost trade and investment in Philippines.