Win Tayong Lahat

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Pro-consumer liberalization reforms needed

COTABATO CITY, Philippines – Morning shoppers line up outside a mall in this city as they wait for its opening, 9 Oct 2015 file image. Senate Committee on Economic Affairs chair Senator Win Gatchalian is pushing for a more liberalized policy on foreign direct investments saying it will bring about “game-changing benefits” for Filipino consumers. Photo by Mark Cayabyab/OS WIN GATCHALIAN

Senator Win Gatchalian has vowed to champion liberalization reforms to build an inclusive, efficient, and competitive business environment in the Philippines, saying that the resulting influx of foreign direct investment (FDI) will bring about “game-changing benefits” for Filipino consumers.

Speaking before the Joint Foreign Chambers of Commerce during the seventh anniversary of Arangkada Philippines, Gatchalian stressed the need for the Philippines to strengthen its investment regime by making it more adaptable to global business demands and trends.

The senator pointed out 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.

“These laws must be made responsive to the needs of the domestic economy and accommodate the dynamics of the regional and global environment. “Gatchalian said.

“Truly, the liberalization of our foreign investment laws is long overdue,” he added.

Data from the 2015 Foreign Direct Investment Regulatory Restrictiveness Index (FDI Index) of the Organisation for Economic Cooperation and Development (OECD) show the Philippines to have the most restrictive foreign investment regime in the world.

The FDI Index gauges the economic restrictiveness of a country, including foreign equity restrictions, screening and prior approval requirements, rules of key personnel, and other restrictions on operation of foreign enterprises in 68 countries, including all OECD and G20 countries. A higher FDI index score indicates a more restrictive foreign investment regime.

Citing the OECD report, Gatchalian said that the Philippines was the only country to score above 0.40. The country’s score was higher than the scores of China (0.386), Saudi Arabia (0.375), Myanmar (0.36), and Indonesia (0.31), according to the senator.

“Liberalizing our laws by relaxing or eliminating these restrictions will allow the country to realize the benefits of FDI as the world transitions into a borderless economic community,” the senator said.

As chair of the Senate Committee on Economic Affairs, Gatchalian said he is willing to lead the charge in easing barriers that foreign businessmen face in the country through legislative reforms.

Citing the government’s flagship Build, Build, Build program as a major opportunity for foreign players to contribute directly to nation-building, Gatchalian highlighted three bills he recently filed, which respectively aim to lift investment restrictions that prevent foreign contractors from bidding on government public works projects (Senate Bill No. 1907), remove the nationality requirement in the granting of licenses for contractors in construction (SB 1909), and dismantle the domestic preference policy of the Government Procurement Reform Act (GPRA) to encourage the entry of foreign suppliers (SB 1921).

“The end result of these reforms would be the institution of a free and fair competitive regime wherein public works projects – from simple farm-to-market roads to big-ticket infrastructure initiatives – will be awarded to the firm which can provide the highest quality final product quickly, and for the lowest cost, regardless of nationality. Thus, construction firms from across the world will be able to play a pivotal role in building the infrastructure to boost interconnectivity and productivity in the Philippine archipelago,” Gatchalian said.

Gatchalian also said that the committee is hoping to fix the dysfunctional dynamics of the Philippine telecommunications sector by fostering liberalization and competition through reform legislation.

These measures include amendments to the 80-year-old Public Services Act to clarify the definition of public utilities as only those public services which are natural monopolies by nature (Senate Bill No. 1754); and allowing for the entry of additional telco players without requiring a congressional franchise by shifting to an Open Access Model in data transmission instead of a single, vertically integrated network (Senate Bill No. 1644).

The senator said these reforms would “greatly level the playing field between the two existing telco giants and any additional players who might want to get into the game,” including aspiring foreign players.

However, he clarified that easing the country’s foreign investment restrictions is not meant to favor foreign firms over domestic players.

“Our goal is to favor consumers by offering them better options on the market. Empowered consumers are the backbone of a vibrant, resilient, and inclusive national economy,” Gatchalian said.