The Philippines is not in the short-term horizon of German investments due to the stalled tax reform, but is viewed by Germany more as a market for its products.
Anke Reiffenstuel German ambassador to the Philippines, described as a “mixed picture” the feedback that the embassy gets from German companies.
Reiffenstuel said German companies show a mixed picture of how they see the Philippines.
“When I look at interest being communicated from Germany towards the Philippines currently, (it) is rather not a place for investment but (for them)… the huge market of 110 million population is a very interesting place. This is largest interest we currently see here,” said at a forum sponsored by the German-Philippine Chamber of Commerce and Industry (GPCCCI) in Makati last week.
Martin Henkelmann, executive director of GPCCI, later told reporters German businessmen are seeing a lot of interests in Thailand and in Vietnam due to their strategic location, being closer to many other important markets.
Henkelmann said with the Corporate Income Tax and Incentive Rationalization Act (CITIRA) pending for the past two years, it is not easy for German investors to decide whether or not to invest in the Philippines.
This is despite the fact that GPCCI has been actively promoting the Philippines, mounting 15 events last year,
“There are a lot of things going on but there are a lot competition with other countries in the region. It (is) easier (for German companies) to go where other companies go. The Philippines is an island… a bit more (challenging to) transport… Things like these play an important role. At the moment, we are seeing interests of German investors in Thailand and Vietnam,” Henkelmann said
He added it is often easier to get investments from companies that are already in the Philippines “that have experienced (doing business) here than getting a new investors.”
“We have to take care of both… (including) investors that are here…we have to make them happy,” he added
Henkelmann cited CITIRA as one of the issues confronted by German investors.
“We understand it takes (a long) process in a democracy to get a law passed … but it is difficult for investors to decide because they are not sure how it will (turn out to) be. They do know the corporate income tax would be lower but all the other issues… the incentives, how long will it be, what will they get… it’s a bit unsure. When they look around, if they need (to invest) outside of China, first of all they (consider) where do other (investors) go (and they) want to be part of the group and secondly (they look around) who has a stable legal framework. Thailand and Vietnam are quite attractive at the moment,” he said.
Reiffenstuel said Vietnam is a very strong competitor as it has been opening up more and more to foreign investors. It has also been implementing a one-stop shop for getting business registrations.
Reiffenstuel also cited incentives such as to tax holidays as an advantage.
