ASEAN peers prod RP on ownership restrictions

ASEAN members are prodding the Philippines to ease limits on foreign investments to take advantage of increased inflows into the region this year, a senior trade official said.

All ten members of the Association of Southeast Asian Nations also committed to roll out joint promotions to lure investors and consult with the private sector to further realize plans to establish a regional production base, a statement released yesterday showed.

The prescriptions were discussed as officials gathered this week for the 42nd ASEAN Economic Ministers meeting in Da Nang, Vietnam.

“If we’re going to get into a freer [market for] foreign direct investments (FDI), they want us to work out internally those constitutional barriers,” Trade Undersecretary Cristino L. Panlilio said in a telephone interview on Tuesday after an ASEAN Investment Area Council meeting.

The Philippines bars full foreign ownership of several businesses such as media, utilities, and mining under Republic Act 7042 which in turn is based on limits cited in the Constitution. The law directs Malacañang to issue every year a “foreign investment negative list” which specifies how much of a stake a non-Filipino entity can have in a business depending on the industry.

This poses a hurdle to full implementation of the ASEAN Comprehensive Investment Agreement, signed in February 2009 to complement the bloc’s plans for a single market by 2015.

“They’re enjoining us to settle that,” Mr. Panlilio said.

He went on to state that the Philippines had attracted just a minor share of FDI inflows. The Philippines has lured only 5.3% of the $36.803 billion in investments that has flowed into the region, according to United Nations data.

“It’s very, very weak. That’s a challenge for the Board of Investments,” Mr. Panlilio said, referring to the Department of Trade and Industry-attached agency which he heads.

Moving forward, more FDI flows into the region are expected this year due to a pickup in the global economy, a joint statement released by ASEAN ministers showed.

“[We] anticipate higher foreign direct investment inflows into ASEAN in 2010 and beyond, after a downturn in 2008 and 2009 ASEAN’s share of total global FDI inflows increased to 3.6% in 2009, from 2.8% in 2008, despite the recent economic downturn,” the ministers declared.

“This reflects well of the ASEAN region in terms of its ability to continue to attract a higher share of investment flows,” they added.

“[And] to further attract FDI flows, [we] agreed to progress work to facilitate greater ASEAN investment flows through joint investment promotions, advancing work on best practices on investment and engaging the private sector in further consultations to obtain feedback on improving the ASEAN investment climate.”  –JESSICA ANNE D. HERMOSA, Senior Reporter, BUsinessmirror