The Philippines lagged behind its Southeast Asian peers in attracting foreign direct investment (FDIs) from 2010 to 2022 partly because of restrictions on foreign ownership in certain sectors, according to a former Department of Finance secretary.
Former DOF secretary Margarito Teves said the Philippines only attracted $9 billion in foreign direct investments (FDI) from 2010 to 2020, lower than for Malaysia and Vietnam, which each attracted $17 billion. Indonesia received $22 billion in the same 12-year period.
The lower FDI inflows to the Philippines resulted in a smaller share of gross domestic product (GDP) invested in economic expansion at 23 percent in 2022—below the 33 percent of GDP in Vietnam, 30 percent in Indonesia and 28 percent in Thailand.
“Attracting more FDIs will help direct more capital, and thus more balanced growth in other regions,” said Teves.
While legislators in the 19th Congress move to ease the Constitution’s limits on foreign capital, Teves wanted their “outright removal” across-the-board, or without the need for additional or new laws.
Teves particularly pushed to allow 100-percent foreign ownership of land, natural resources and mass media.
“Removing restrictions on land ownership will provide an opportunity to use idle lands for agricultural purposes and increase our supply of food and other agricultural products, which would help curb inflation,” Teves said.
Teves said while the present and previous administrations already lifted several restrictions in the Foreign Investments, Public Service, Retail Trade Liberalization and Renewable Energy laws, these weren’t enough to attract bigger foreign money.
“Recent laws passed to improve the investment climate may face judicial challenges, as seen in the amendments to the Public Service Act because the provision on public utilities is still in the Constitution. The same is true in the amendments to the implementing rules and regulations of the Renewable Energy Act, if the restrictions on natural resources are not removed,” he said.
“With foreign investors considering a country’s legal framework as an important factor in their investment decisions, removing these restrictions in our Constitution would send a clear and compelling message of welcome to foreign investors,” Teves said.
“Doing away with restrictive provisions is a necessary first step to ensure that our legal framework is at par with our neighbors to create a more attractive investment environment,” Teves said.