Vol. XX, No. 207
Friday, May 18, 2007 | MANILA, PHILIPPINES
Today’s Headlines
BY REAGAN D. TAN, Reporter
Though upbeat about prospects after the May 14 elections, foreign businessmen are keeping their fingers crossed that elected politicians actually legislate reforms needed to boost the country’s competitiveness and lure investors.
They said this may not be easy since unofficial and official counts show the Senate and the House of Representatives headed for another term of clashes that could derail the passage of key measures.
Still, officials of the Joint Foreign Chambers yesterday said they were more "optimistic" than ever about doing business in the Philippines.
"As foreign investors we can’t take a position in Philippine politics. Our hope is that whatever the composition of Congress, [legislators] have the future of the country in their heart," said Henry J. Schumacher, executive director of the European Chamber of Commerce of the Philippines.
According to latest counts, the opposition is leading the senatorial race. The Palace, meanwhile, has already declared victory at the local and the congressional district levels.
But Frederick C. DyBuncio, country manager of international financial services firm JP Morgan Chase and Co., said foreign investors generally saw the elections as a "non-event" and that the concern over Congress’ composition is "not the feedback [we] are getting [from clients]."
"From the investors’ point of view, there’s no change in the current political environment. It’s pretty much status quo," he said.
"With the President saying that she will not give up short term gains for long term gains, investors believe her. Otherwise, they would not have come here," he said at the sidelines of a two-day international business forum organized by JP Morgan in Makati City.
The JP Morgan "Philippines Corporate Access Days" forum, dubbed "Coming Back to the Philippines", includes 200 global clients and is the firm’s first local event since 2000.
"After the Asian financial crisis, there has been lesser interest in the region. But now you’ve seen the stock market, the peso ... there is now an increase in interest to [bring in] new investments," Mr. DyBuncio said.
Robert M. Sears, chairman of the American Chamber of Commerce in the Philippines, Inc., said the "confidence level is up."
"Let’s get through the elections and see what’s ahead. So far everything appears to be okay. But my personal concern is the number of killings," he said.
Over a hundred people have been killed so far in election related violence.
"We’re just waiting for Comelec (Commission on Elections) to come up with the official results," Mr. Sears added.
Sean Georget, executive director of the Canadian Chamber of Commerce of the Philippines, told BusinessWorld the recent billion-dollar investment of Texas Instruments, Inc. and the announcement that infrastructure works are picking up are "news that we haven’t seen in a number of years."
The Public Works Department has said that major infrastructure projects under the President’s super-regions program will go into full swing after the elections and that a 2010 target would be met.
Mr. Georget also played down the country’s lower competitiveness ranking - 45th from 42nd - in the 2007 World Competitiveness Yearbook of Switzerland-based International Institute for Management Development.
"It’s a perception issue ... [improvement in the rankings] will come naturally [with reforms]," he said.
Mr. DyBuncio said JP Morgan Philippines toured business executives since Wednesday in a bid to show that "it’s different when [they] actually come to the country."
The Joint Foreign Chambers has sought legislative approval of measures such as the creation of the Philippine Trade Representative Office; regulation of phone calls over the Internet; a law encouraging the use of "green" energy; bills to strengthen small entrepreneurs; an anti-smuggling law; pre-need code; a law to regulate collective investment vehicles such as unit investment trust funds; and the rationalization of fiscal incentives.
They are also urging incumbent lawmakers to pass key measures such as the creation of a credit information bureau, amendments to the customs brokerage act, and the national tourism policy act before the 13th Congress formally closes next month.
Mr. Schumacher also said foreign businessmen want ownership limitations set by the Constitution removed, brushing aside fears that moves to change the charter - a politically sensitive matter - would be derailed anew.
"That (the earlier charter change initiative) was a political issue, but if you take the President’s words that she would open up the Constitution to the rest of the world, that’s good news and that will attract more FDIs (foreign direct investments)," Mr. Schumacher said.
British Chamber of Commerce of the Philippines director Michael Whiting said the Arroyo administration has put in quite a number of reforms but more should be done.
"We are in the right direction ... but we can’t be complacent," he said.
Arroyo makes pitch for Philippines, says RP ‘the best value in Asia today’
President Gloria Macapagal- Arroyo yesterday vowed that politics would not derail the Philippines’ economic resurgence.
"I think we’re the best value in Asia today," Mrs. Arroyo told a JP Morgan Chase equity conference, the firm’s first in the country since 2000.
"Our economy has reached a new level of maturity and stability with some of the strongest macroeconomic fundamentals in a decade. Politics will not alter the course of our economic comeback," she said.
With politicians "sympathetic" to her administration returning to elected posts, "political stability and economic reform" will be assured for the remaining three years of her term, she said.
Mrs. Arroyo promised to maintain her administration’s focus on "economic reform [and] pro-growth, pro-trade and pro-investment strategies that help lift up our people from poverty and helping the Philippines finally into contention as a real investment destination."
The single biggest act that showed her administration meant serious business, she said, was pushing for the passage of the value-added tax (VAT) law despite strong public opposition. Mrs. Arroyo said she did not want to sacrifice long-term gains for short-term political expediency.
"In one bold stroke, it (the VAT law) raised enormous revenue. It also sent an unmistakable signal that we are serious about moving the nation forward," she said.
Had the tax law had not been passed, the Philippines would not have averted a fiscal crisis, Mrs. Arroyo said in an interview with the Wall Street Journal on Tuesday.
Aside from keeping fiscal discipline, targeting a balanced budget by 2008 and investing in human and physical infrastructure, Mrs. Arroyo said her administration remains keen in overhauling the political system by shifting into a parliamentary form of government.
"Now we have to work on political reform because ... the political system is still a mess. It’s not worthy of a modern nation," she said.
Moves by her congressional allies and local executives to change the Constitution last year failed in the face of public resistance.
Mrs. Arroyo also said reforms will include measures that will liberalize the entry of foreign investment.
An step was taken when the Supreme Court upheld the Mining Act in 2005, effectively increasing the industry’s exports to $2 billion in 2006 from $800 million in 2005, she said.
Mrs. Arroyo said that during a trip to Australia later this month, she will "try to swing the final decision" for a huge mining investment.
"We’re feeling the interest," the President said.
At the close of her speech, Mrs. Arroyo said: "The short answer to continuing economic growth is sounded in three words: invest, invest, invest."
http://www.bworldonline.com/BW051807/content.php?id=001
