Finance Secretary Carlos Dominguez III told American investors Thursday night the Philippines is a fast expanding free market where they can bring in their capital with greater confidence than before as a result of a fresh set of economic liberalization measures carried out or about to be implemented by the Duterte administration.
“Now is the best time to do business in the Philippines,” the finance chief said at a briefing for American business leaders and policy makers. “This year, we are well on our way to returning to normal with the Philippine economy expected to expand further between 7 and 9 percent.”
He said the economy is recovering rapidly and in the last quarter of 2021 its output or the gross domestic product (GDP) grew by 7.7 percent, making the country’s expansion the highest among members of the Association of Southeast Asian Nations (ASEAN).
Dominguez said the recent adoption of the Retail Trade Liberalization Act (RTLA), along with the Congress-approved amendments to the Public Service Act (PSA) and Foreign Investments Act (FIA) soon be signed into law by President Duterte, complete the set of economic reforms that make the Philippines’ a premier investment destination in the region.
“These three forward-looking measures widen the horizon for investments. They create numerous opportunities for synergy between local and international firms. There is now enough space for international firms to form joint ventures with Filipino companies, especially those at the cutting edge of information technologies,” Dominguez said.
Some 200 American business leaders and policymakers gathered via teleconferencing at the virtual Philippines’ Economic Briefing (PEB) hosted by the Philippine Embassy in Washington DC.
As the Philippines also committed to cut its greenhouse gas emissions by 75 percent by 2030, Dominguez said he expects a sharp rise in green investments in the country in the years ahead.
Dominguez urged American investors to establish or expand their retail trade operations in the Philippines, now that the new RTLA has lowered the minimum paid-up capital requirement for foreign corporations from $2.5 million to only$500,000.
Foreign retailers who want to open more than one physical store can now expand with a minimum investment of $200,000 per store versus the previous requirement of $830,000 per store.
The law has simplified the qualification requirements of foreign retailers by removing the mandatory net worth, the number of retailing branches, and retailing track record conditions.
Dominguez said experienced and strategic investors from the United States can bring in their capital and invest in the fields of telecommunications, media and private transportation vehicles once the PSA is enacted.
Under the amended PSA, public services will be open to full foreign ownership although the utilities sector will remain majority owned by Filipinos subject to the 60-40 ownership rule under the Constitution.
The nationalized areas only include distribution and transmission of electricity; water pipeline distribution system, wastewater, and sewerage pipeline systems; petroleum and petroleum products pipeline transmission systems; seaports; and public utility vehicles (PUVs) under the amended PSA.
US businessmen can also look forward to the amendments to the FIA as the foreign investment negative list is reviewed every two years and liberalizes the practice of certain professions.
Thus far, enterprises that would otherwise be unable to do business in the Philippines without foreign talent would now be able to set up shop in the country.
The country’s 2021 full-year GDP growth of 5.6 percent which exceeded the government’s target is among the best in the region and its credit rating peers.
Last year’s tax collection stood nine percent higher than in 2020, signaling a return to robust economic activity, while trade volume recovered to pre-pandemic levels, Dominguez said.
The country’s foreign direct investments (FDIs) in 2021 already surpassed the level in 2020 and remittances from overseas Filipino workers (OFWs) rose 5 percent, fueling consumer demand.
The country’s foreign currency reserves also grew steadily to $109 billion as of end-December 2021.
COVID-19 cases are also falling rapidly owing to accelerated vaccination program, allowing more people to return to work again
“Clearly, these bullish signs of recovery are a product of our hard work and preparation before the pandemic hit us,” Dominguez said.
