By Butch Fernandez, March 13 2019; Business Mirror

Image Credit to Manila Bulletin

The Senate was asked to front-load the passage of remedial legislation amending the country’s current economic laws to foster a more competitive business environment in the Philippines.

Sen. Sherwin T. Gatchalian on Tuesday prodded the Senate to accelerate the early enactment of a law embodying “much-needed legislative reforms designed to make the country more adaptable to current and future business demands and trends.”

The current chairman of the Senate Committee on Economic Affairs aired the plea following the Executive branch’s renewed call for Congress to lift foreign ownership limits under the 1987 Constitution amid the slowdown of foreign direct investment (FDI) inflow in 2018.

“Restrictive foreign investment laws have remained impediments to our country’s economic advancement. The time is ripe to reconsider amending some of our laws to encourage foreign investors to do business in the Philippines,” Gatchalian said.

The senator suggested that “we should take advantage of our good economic performance by further harnessing the country’s potential for foreign investment,” adding that this starts by “reviewing and updating our laws to encourage the influx of foreign capital through the development of a more investment-friendly climate.”

In a news statement, Gatchalian cited the Bangko Sentral ng Pilipinas (BSP), saying FDI attracted by the Philippines slowed by 4.4 percent to $9.8 billion in 2018 from $10.3 billion in 2017 amid the sharp drop on net investments in equity capital.

The BSP added that in 2017, the Philippines’s FDI of $10.3 billion paled in comparison with most of its peers in Southeast Asia, trailing behind the likes of Singapore ($63.57 billion), Indonesia ($22.17 billion) and Vietnam ($14.10 billion).

The lawmaker lamented that the Philippines “continues to lag behind its Asean neighbors in terms of capturing foreign investment due to the country’s relatively restrictive and less competitive economic policies.”

This, even as Gatchalian cited the enactment of several economic reform bills that aim to foster an inclusive, efficient and competitive business environment in the Philippines, and ensure the country will capture a lion’s share of foreign investments.

The senator recalled that among the reform measures were Senate Bill 2102, or An Act Amending Republic Act 7042, otherwise known as the Foreign Investments Act   of 1991, which provides clarity to foreigners who are interested in investing in small and medium enterprises or practicing their profession in the Philippines. With SB 2102, Gatchalian proposes to update FIA’s declaration of policy to encapsulate inclusive economic growth, advancements in technology, and the dynamic relationships among global and regional economies.

The Gatchalian bill mandates the National Economic and Development Authority, in cooperation and consultation with the Board of Investments, the Department of Trade and Industry, the Securities and Exchange Commission, and other pertinent government agencies to conduct an annual review of the country’s Foreign Investment Negative List to ensure that the list is aligned with this policy.

The remedial legislation likewise seeks to amend Section 4 of the FIA to expressly exclude “the practice of professions” from the coverage of the FIA, thus emphasizing that the law only governs equity investments in the Philippines by non-Filipinos.

At the same time, Gatchalian renewed his call for the removal of anti-competitive restrictions on foreign investments, pointing to key amendatory measures he has filed to erase these restrictions from key economic laws including the Public Services Act and the Retail Trade Liberalization Act.

“With global growth expected to moderate in 2019, it is time for us to pass legislative reforms that are responsive to the needs of the domestic economy and, at the same time, accommodate the dynamics of the regional and global environment,” the senator said.