The United States has noted the improved investment climate in the Philippines, citing notably the one that prevails in its economic zones as an advantage for the country.
In the US Department of State’s (DoS) 2020 Investment Climate Statements on the Philippines issued on Sept. 8, 2020, the US said the Philippines’ overall investment climate continues to improve, marked by the Standard & Poor’s 2019 upgrade of Philippines’ rating to BBB+, the country’s highest credit rating to date. ; and investment-grade sovereign credit ratings based on sound macroeconomic fundamentals.
The report said the business environment is “notably better within the special economic zones, particularly those available for export businesses operated by the Philippine Economic Zone Authority (PEZA)… known for its regulatory transparency, no red-tape policy, and one-stop shop services for investors.”
“PEZA administrators have earned a reputation for maintaining a clear and predictable investment environment within the zones of their authority,” the DoS report said.
The DoS cited the noteworthy advantages of the Philippine investment landscape in the economic zones aside from a large, educated, English-speaking, and relatively low-cost Filipino workforce.
These include preferential tax treatment and tax and duty-free importation of capital equipment and raw materials.
“Goods imported into ecozones may be stored, repacked, mixed, or otherwise manipulated without being subject to import duties and are exempt from the Bureau of Customs’ selective pre-shipment advance classification scheme,” the report added.
The DoS report, prepared by economic officers stationed in US foreign service posts around the world, provides country-specific information on the business climates of over 170 countries and economies.
The DoS report serves as a resource to help US companies make informed business decisions on investing overseas.
The report said while the Philippines has received record-high foreign investment pledges approved by its investment promotion agencies in 2019 at $7.65 billion, which more than doubled from 2018, this is still low compared to fellow Asean countries Singapore, Indonesia, Vietnam and Thailand.
The report has a long list of investment constraints and disincentives in the Philippines, some of which it said are being addressed.
These include foreign ownership limitations, poor infrastructure, high power costs, slow broadband connections, congestion in major cities and ports, slow and burdensome business registration process, regulatory inconsistencies, inefficient judicial system and corruption
“ The Philippine government’s efforts to address these include the Corporate Income Tax and Incentives Rationalization Act ; and amendments to Public Service Act, Retail Trade Liberalization Act, and Foreign Investment Act, updates to the Foreign Investment Negative List; the signing in 2019 of the implementing rules and for The Ease of Doing Business and Efficient Government Service Delivery Law; and plans to spend more than $180 billion through 2022 to upgrade infrastructure under the Build Build Build program.
Meanwhile, Secretary Ramon Lopez revealed the Department of Trade and Industry was able to generate P3.2 billion investments that are relocating from China. These nine projects are mostly in manufacturing.
Lopez said there are 14 ongoing leads in agriculture, manufacturing as well as information technology-business process outsourcing.