PHL corruption, ownership limits keep trade from growing — USTR

The corruption and lack of transparency continuing to plague the Philippines are having a negative impact on trade and investments, the United States Trade Representative (USTR) said in its latest report released Tuesday.

“The Aquino Administration continues to implement the anti-corruption reforms outlined in its Philippine Development Plan 2011-2016 and has committed to actively pursue corruption charges involving prominent public officials.

“Nevertheless, corruption remains a pervasive and longstanding problem in the Philippines and one that can place US companies at a disadvantage in the Philippine market,” the USTR “2013 National Trade Estimate Report on Foreign Trade Barriers” read.

“Both foreign and domestic investors express concern about the propensity of Philippine courts and regulators to stray beyond matters of legal interpretation into policy-making and about the lack of transparency in judicial and regulatory processes,” it added.

Apart from the annual Trade Estimate Report—which lists barriers to trade in countries the US deals with—the USTR also publishes the “Sanitary and Phytosanitary Barriers to Trade” and “Technical Trade Barriers.”

Philippine Trade officials were not available for comment as of this posting.

Foreign ownership limits in many sectors—telecommunications, insurance, banking, financial services, advertising, public utilities, professional services, express delivery services, retail trade and civil aviation—also make it difficult for American companies to do business in the Philippines, according to the USTR.

Under the Philippine Constitution, foreigners are limited to 40 percent ownership of most businesses.

The Philippines needs to reclassify telecommunications beyond utility and let foreign equity increase as “the applicability of the public utility designation to value-added services is particularly burdensome and inconsistent with international practice,” the report noted.

The USTR also took a peek at banking practices in the Philippines, noting that mandatory lending provisions “are more burdensome on foreign banks for a number of reasons, including constrained branch networks and foreign land ownership restrictions that impede their ability to enforce rights over land accepted as collateral.”

There is a need for Philippine banks to aside loans for agriculture and micro, small and medium enterprises, it added.

However, corruption and foreign ownership restrictions are just the tip of the iceberg in the list things that for the USTR make doing business in the Philippines difficult for foreign entities.

“The United States is concerned with the length of time that it takes for the Philippines to complete pest risk assessments for fresh vegetables,” according to the USTR.

In 2006, the US asked the Philippine Department of Agriculture to assess the risk of pests in US-grown broccoli, cauliflower, lettuce, carrots, cabbage and celery. The, in 2009, it asked the same for fresh potatoes.

The findings are still being evaluated by Philippine authorities, thus limiting the amount of these US farm products that enter the Philippine market. — VS, GMA News