ECCP President Guenter Taus outlined specific concerns that need to be addressed to improve business conditions in the Philippines, noting how preferred incentives of the IPP 2017-2019 reflect similar priorities of the business chamber.
The IPP 2017-2019 is awaiting the approval of President Rodrigo R. Duterte. Submitted to Malacañang in late December, the IPP aims to make development inclusive, providing incentives intended to drive progress across regions.
“We are encouraged seeing the IPP and its provisions, showing resolute commitment to encourage and bring in investors to the Philippines,” he said in an e-mail to BusinessWorld last week.
Commenting on the final copy of the draft, Mr. Taus cited the need to address issues in certain key sectors like telecommunications, construction, infrastructure development, climate change and energy efficiency.
“In the area of telecommunications, the opening up of this sector to more industry players as well as multinational prospects is much needed as this will help provide consumers with fast, reliable and stable internet at competitive price,” he said.
Among the preferred activities listed under the new IPP are strategic services. These cover a wide variety of services from the design of integrated circuits to state-of-the-art engineering, procurement and construction.
Under strategic services, incentives will be given to “new players” that establish connectivity for fixed and mobile broadband services.
“Only new players may qualify for registration,” the IPP read.
PLDT, Inc. and Globe Telecom, Inc. — which are in the middle of their own expansion plans — currently dominate the market. The government has been looking for a third player to challenge the duopoly and possibly make telco services more affordable.
Apart from being named a priority in the new IPP, the infrastructure industry could attract more investment if it eliminates a rule by the Philippine Contractors Accreditation Board (PCAB) that currently favors domestic contractors over foreign ones, in terms of the flexibility of their licensing schemes.
“With regard to construction, PCAB issue must be addressed and abolition (of the requirement that foreign firms be licensed separately for each project) would probably encourage much needed investment in needed technologies in order to guarantee that necessary infrastructure projects are being realized,” he said.
“We also believe tourism is one of the most important sectors with the highest potential to create inclusive growth, through employment generation and economic development in remote areas across the archipelago. However, much infrastructure development is badly needed to achieve the ambitious goal of achieving 6.5 million tourist arrivals this year.”
He also said that the government should be true to its word and ratify the Paris agreement in mid-2017, which would formally include the Philippines in the global movement to cut down carbon emissions in order to lessen the risk of climate change.
Mr. Taus added that energy efficiency technologies, which are among preferred activities under the new IPP, could be further incentivized through an expanded list of technologies exempted from import duties for PEZA locators; and expansion of the measure nationwide level to cover all manufacturing activities, even those that are not located in PEZA zones.
He also said noted the need to ensure institutionalizing energy efficiency and conservation and the nationwide coverage of incentives for the installation of technology in support of energy efficiency and conservation.
“Furthermore, we are of the opinion that the IPP incentives and penalties need to be in line with the energy efficiency bills supported by the Department of Energy (DoE) and developed during the 16th Congress,” he said.
The European Union is one of the largest investors in the Philippines.
Net foreign direct investment (FDI) rose 86.98% in 2015 to $330.64 million, according to central bank data. However, preliminary figures show that net FDI fell 31.23% in the first 10 months of 2016 to $142.19 million.
Presidential Spokesperson Ernesto C. Abella said in a text message yesterday that the process to approve the IPP is “ongoing.” He later clarified that the “Philippine Development Plan must be approved first.”
If approved, the 2017-2019 IPP will count as “preferred” investment the following areas: manufacturing including agri-processing; agriculture, fishery and forestry; strategic services; infrastructure and logistics including local government unit public-private partnerships; health care services including drug rehabilitation; mass housing; inclusive business models; environment and climate change; innovation drivers; and energy.
