Europe taking money elsewhere due to Gloria policy flip-flops

By Ayen Infante

05/09/2008

European investors have threatened to divert their major investment plans in the country this year to either Thailand or Vietnam after pulling the Philippines out of the list of their priority sites for future projects due to vaccilating government policies and other critical issues affecting the country’s business environment.

This was highlighted in a consensus made by top executives of European companies here during the one-day industry workshops sponsored by the European Chamber of Commerce of the Philippines (ECCP) last April 24, 2008.

The conference was aimed at gathering all stakeholders of the four industry sectors including infrastructure, manufacturing, services and agriculture to identify the challenges and opportunities for their particular areas.

Important concerns, as well as recommendations to immediately address the issues were presented by ECCP in a press conference yesterday together with top officials of the government including Trade and Industry Secretary Peter Favila where Europeans stressed the need for the Arroyo administration to inject vital reforms in order to attract and sustain investments.

In the same presentation, ECCP said the Philippines, due to flip-flopping government policies, has become a difficult investment location, and it is now seeing Thailand and Vietnam as the next sites to look at.

In the area of infrastructure, common issues were directed to the lack of a concrete investment policy, the role of local government units (LGUs) imposing policies that deter investments, instead.

Investors also raised the issues about the 40-percent ownership limitation on foreign firms which was seen as discouraging to foreign investors.

In the energy sector, among the problems identified were the foreseen energy crisis in the next three years, insufficient energy capacity in the pipeline and new power plants facing difficulties with their surrounding communities.

The concerns in the transportation industry, meanwhile, were focused on the need to widen road and railway networks, the opening of the mothballed NAIA Terminal 3, the high-speed link between Manila and Clark to make DMIA viable and complete the expressway access to Batangas port.

In the manufacturing sector, concerns were centered on the lack of skilled labor, high cost of electricity and absence of real industrial policy.

On agriculture, basic issues were the infectivity of the Comprehensive Agrarian Reform Program (Carp), high cost of transportation, smuggling, uncompetitive price of imported products as against locally produced goods, and high post-harvest losses at 40 percent.

Among the concerns raised in the area of services, on the other hand, were the lack of access of Philippines companies to information on business opportunities in Europe, the failure of the Philippine Retirement Authority (PRA) to promote the Philippines as a retirement destination.

European participants also made a recommendation to the Arroyo government to address the issues by way of allowing members to participate in the formulation of long-term investment priorities plan and negative list, establishment of reporting system for investors who are being pressured by LGUs, creation of social courts that would handle cases on major investments.

European business leaders believe that without the immediate resolution on these problems, the Philippines would remain less attractive to foreign investors.

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