The Philippines could attract more foreign direct investments and generate more quality jobs by implementing a package of reforms to address the issues of corruption, infrastructure services and government regulations.
This was stressed by Rogier van den Brink, lead economist at the World Bank Philippines, during the 39th Philippine Business Conference held at the Manila Hotel.
Ven den Brink noted that the Philippines is lagging behind in the Asian region in attracting foreign direct investments due to restrictive rules on ownership relative to the other countries in the region.
However, he emphasized that there is a strong international evidence on foreign direct investments in relation to technology transfer, economic growth, employment, exports and governance.
To attract more foreign direct investments, Ven den Brink recommended a review and reduction in the restrictions imposed in the foreign investment negative list.
The government should focus on reforms in sectors where competition, capital, technology and other factors associated with foreign ownership will likely result in lowering input prices and creating more and better jobs. These are in telecommunications, shipping, agribusiness, land and the practice of professions, said Van den Brink.
According to Van den Brink, the Philippines should invest more in education, health, and infrastructure.
“The high case scenario calls for spending an additional 2.5 percent of gross domestic product (GDP) on infrastructure and an additional five percent on social services, for a total of 7.5 percent of GDP over the next decade.”
He also stressed that higher spending on education would bring the Philippine education closer to international standards, together with higher spending on health that would create a pool of employable Filipinos for foreign companies eyeing to invest in the country.
The government should further strengthen the independence, competence and capacity of important regulatory bodies and the justice system, Van den Brink said.
He said that priority reforms should focus on defining the role of regulatory bodies including provisions to limit conflict of interest, ensure some degree of fiscal autonomy and adequate expertise to avoid politicization of decisions and allow them to execute their mandates freely, reduce discretionary powers of regulators by establishing clear and rule-based procedures and policies, improve transparency of decisions making, and conduct regular regulatory assessments.
The government should also encourage the rapid growth of businesses of all sizes, facilitate movement of small firms to the formal sector, reduce opportunities for rent-seeking and corruption with priority reforms in starting, operating, and closing a business; paying taxes and accessing finance, Van de Brink added.

Source: Manila Bulletin - October 27, 2013