Unified investment-promotion agency should help boost FDI

July 7, 2015 at 15:06

THE Philippine Institute of Developmental Studies (PIDS), a state-owned think tank, said a single, incentive-giving body is preferable for efficiency and uniformity of rulesas opposed to the present system of several investment-promotion agencies (IPAs) existing in the country.

“Our investment regime, in general, compares well with those of other countries but the problem, it seems to me, is that there are several incentive-giving bodies such as the Board of Investments, the Peza [Philippine Economic Zone Authority]..in other countries you only have one, there’s a uniformity of procedures and standards,” Dr. Gilberto M. Llanto, PIDS president, said at the Manila launch of the United Nations Conference on Trade and Development’s (UNCTAD) World Investment Report 2015 on Wednesday.

He said with a single agency in charge of investment promotion and incentive-granting for foreign and local business, the country has a better chance of capturing more foreign direct investments (FDI) as processes are simplified.

Dr. Erlinda Medalla, economics professor and copresenter of the UNCTAD’s World Investment Report 2015, echoed the sentiment saying that having one agency will also help in crafting a more cohesive strategy in attracting foreign locators to set up shop in the country.

“It’s important that we have this [harmonizing policy] in place, especially now that the Department of Trade and Industry has a road-mapping strategy. Now that we know where the industries want to go, the incentives administration can be really effective by putting all of these IPAs together,” Medalla said.

The relative lack of FDI remains a concern for the economists, who again noted the constraints to more FDI inflows, such as poor infrastructure, power woes, corruption, governance and uncompetitive tax system. Foremost among the barriers to FDI, which have been repeated time and again by development institutions, are the foreign-equity restrictions enshrined in the Constitution.

The speakers noted global FDI is predicted to recover in the near future, but the Philippines could literally “miss the boat again” if the foreign limitations and other factors, such as a uncompetitive tax regime, remain in place.

“Even though we have done some things in reforming our investment regimes, we still come up behind in attracting FDI,” Medalla said.

Even now when Asia is bucking the trend of declining global FDI inflows, the country’s pace of growth has been slow, it was noted.