ECONOMIC CHANGES TO BOOST FDIS: BSP supports govt’s pursuit of structural reforms

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The Bangko Sentral ng Pilipinas (BSP) maintains its view on the proposed economic amendments to the 1987 Philippine Constitution, stating that these amendments will promote inclusive economic growth of the country.

“BSP believes that reducing, if not removing, restrictive provisions will facilitate increase in foreign capital investment and hasten the growth of the economy, which, in turn, can expedite the ability of the nation to realize inclusive economic growth,” the central bank said in a position paper.

Latest data from the BSP showed foreign direct investment (FDI) net inflows rose by 27.8 percent to reach $1.0 billion in November 2023 from the $820 million net inflows recorded in November 2022.

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The central bank said this improvement was due mainly to the 57.8 percent expansion in nonresidents’ net investments in debt instruments to $897 million from $568 million a year ago.

Equity capital placements during the reference month emanated largely from Japan and the United States. These were channeled primarily to the manufacturing, real estate, and construction industries.

These developments brought the cumulative FDI net inflows to $7.6 billion in the first eleven months of 2023, albeit lower by 13.3 percent than the $8.7 billion net inflows recorded in the same period in 2022.

BSP said that, notwithstanding the country’s sustained economic growth, “FDI remained subdued due to the lingering impact of high inflation and low growth prospects globally.”

The position paper refers to Resolution of Both Houses No. 7 which seeks to amend certain economic provisions of the 1987 Constitution of the Republic of the Philippines, particularly Section 11 of Article XII on National Patrimony and Economy, paragraph 2, Section 4 of Article XIV on Education, Science and Technology, Arts, Culture, and Sports, and paragraph 2, Section 11 of Article XVI on General Provisions.

This view was also stated in BSP’s position papers dated 12 September 2014, 06 December 2016, and 29 November 2019 submitted to the House of Representatives during the 16th, 17th, and 18th Congress, respectively.

“The BSP has supported the government’s pursuit of structural reforms over the past decades, particularly those aimed at strengthening the country’s growth prospects. These reforms help stimulate the economy, generate more jobs, facilitate the efficiency of public services, and improve competition via fostering a level playing field for investors. We continue to support such measures,” BSP said.

“We reiterate that the BSP remains ready to work with Congress in pushing for key reforms to facilitate an enabling investment environment towards furthering the country’s economic growth and development,” BSP added.

Based on BSP’s responsibility and objectives, BSP supports efforts that will promote inclusive economic growth of the country including, among others, easing restrictive economic provisions in the 1987 Constitution.

The position paper stressed that the “frequently perceived wisdom underlying the proposals to amend or revise the Constitution is that it gives the nation the opportunity to be responsive to the changing times and enables it to stir towards the direction it envisions.”

“The scope and extent of international trade and commerce have dramatically increased over the last four decades, and so have the scale and sophistication of the global and domestic economy and financial system. In this regard, we believe that there may be room to consider the amendments to the economic provisions of the Constitution in order to make the Philippines more competitive and allow our laws to keep pace with recent and future developments,” BSP said.

“These proposed amendments to the economic provisions of the Philippine Constitution are in line with the government’s efforts and measures to address major challenges in attracting foreign investments that, in turn, help achieve growth and financial resilience. To fully realize the economic benefits of such amendments, it would be instructive to advance policies that would enable domestic industries to develop and enhance their productivity,” the central bank added. –Jimmy Calapati

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