Finance Secretary Carlos Dominguez III told Japanese businessmen that the Philippine government will ease foreign ownership restrictions in certain industries by amending the Constitution starting next year.
Dominguez said this was in line with President Rodrigo Duterte’s commitment to open up the economy to more long-term and job-generating foreign direct investments.
Dominguez also informed Japanese investors during a forum on the Philippine economy in Tokyo that the government currently reviewing its Foreign Investment Negative List with the goal of lifting foreign ownership limits in the areas of construction and other sectors.
“President Duterte has committed to open up our economy. There are two ways we open up our economy to more foreign investments,” Dominguez said.
He said the first step, which was the review of the FINL, began in May this year.
“A window opened for us to review that list. We are currently reviewing it with the idea of removing areas such as construction and other areas to foreign investments,” he said.
Dominguez said the second step, which would require the cooperation of the Congress, “is through the amendment of the Constitution, and the president has called for a revision of our Constitution, which we believe will start probably next year or in about 12 months.”
“We are moving towards opening up the economy to more foreign investments,” Dominguez said.
Dominguez said in earlier forums that he was in favor of lifting the foreign ownership limits for certain sectors to generate more foreign investments, except for land.
Data from the 2016 Asean Investment Report showed that the Philippines continued to lag behind other members of the Association of Southeast Nations in terms of foreign direct investment inflows.
The report showed the Philippines with a net FDI inflow of $5.724 billion in 2015, representing only 4.7 percent of the total net FDI inflow of $120.818 billion in the region.
Singapore accounted for half of the net FDI inflows that year with $$61.284 billion, followed by Indonesia with $16.916 billion or 14 percent of the total net inflow; Vietnam with $11.8 billion or 9.8 percent; Malaysia with $11.289 billion or 9.3 percent; and Thailand with $8.027 or 6.6 percent of the total.
Dominguez said the tax reform programme would play a pivotal role not only in overhauling the Philippines’ inequitable, complex and inefficient tax system but also in attracting more FDIs.
The finance chief said he was “confident” that the first package of the Duterte administration’s Comprehensive Tax Reform Program”•the Tax Reform for Acceleration and Inclusion Act”•would be approved by the Philippine Congress before December this year.
Train, which aims to slash personal income tax rates while raising additional revenues for the government’s unprecedented spending on infrastructure, human capital and social protection, was approved by the House of Representatives in May.
The Senate ways and means committee recently passed its own Train version and submitted the bill for plenary deliberations.