Now is right time for PH to open up economy

Says EU

The EU Delegation in the Philippines said that now is the right time to open up the domestic economy saying that fair level playing field can be ensured by the well-functioning Competition Commission.

“The Philippines should also take more advantage of opening up the economy now that there is already an overarching agency that will ensure a competitive market,” said Ambassador Franz Jessen, head of the EU Delegation in Manila in a speech at the Competition Forum organized by the European Chamber of Commerce of the Philippines and the EU-Philippines Business Network.

Jessen cited the strides made since the Philippine Competition Law (PCC) was enacted two years ago.

In the short span of time that the PCC was established, Jessen said the Philippine Competition Commission had made strides in educating its stakeholders of the importance of competition to the economy, has studied quite a number of cases and continues to learn from other economies including the EU on the proper way of implementing a sound and strong competition policy.

But Jessen also stressed that the impact of the enactment of the law “doesn't end here. In fact, there's more to be done.”

According to Jessen, now that there is a functioning anti-trust authority in the country, the Philippine government could take more advantage of opening up the domestic economy.

Foreign businessmen have clamored for the opening up of certain sectors of the economy where foreign equity investments are limited to minority 40 percent stake. These are in the areas of media, retail, education, mining, land ownership and other sectors that are listed under the Foreign Investments Negative List.

Continued restrictions of foreign ownership in these sectors have been partly blamed for the country’s low foreign direct investment inflow compared to its more liberal ASEAN neighbors.

In Europe, Jessen said, competition policy is a vital part of a dynamic market and it has continued to adapt to these changing times.

“EU's competition policy aims to provide everyone in Europe with better quality goods and services at lower prices. It is about applying rules to make sure companies compete fairly with each other,” he said.

Jessen cited a competition case that the EU recently decided on which most people have been familiar with is the case of Google.

Google dominates the market for Internet searches in the EU. And like any dominant company, it has a special responsibility that is to make sure it doesn't use the power which its dominance gives it in a way that harms competition. That is why the EU took the action when Google decided to use its search engine to deny its rivals a chance to compete.

“EU's decision means Google has to treat other comparison shopping services equally with its own so consumers have real choice and so that competition drives both Google and its rivals to come up with innovative services that meet consumers' needs,” the ambassador said.

This is just an example of how the EU competition policy protects businesses, big and small. Foreign companies including Filipino businesses are also protected by the same EU competition policy to ensure that these companies are able to compete in their respective industries or sectors fairly, he added.

Jessen noted that the Philippines is rapidly growing and this comes with an increasing demand for more goods and services.

“With the goal of the Philippines to move towards upper middle-income economy, and sustaining its robust growth, strengthening market competition is key,” he added.

Having a competition policy in place is important both for businesses and consumers.

First, he said, it ensures low prices for all. In a competitive market, prices are pushed down. This is not only good for consumers – when more people can afford to buy products, it encourages businesses to produce and boosts the economy in general.

Second, it ensures better quality. Competition encourages businesses to improve the quality of goods and services they sell – to attract more customers and expand market share. Third, it brings more choices. A competitive market will make businesses try to make their products different from the rest which results in greater choice – so consumers can select the products that offers the right balance between price and quality.

Fourth, it brings innovation. In order for businesses to offer more choices and produce better products, businesses need to embrace the culture of innovation.

Fifth, it makes businesses better competitors in global markets. Competition makes local businesses become stronger and be able to hold their own against global competitors.

He said the EU and the EU business community are one with the Philippines in building competitive culture.

“Competition drives our economies to achieve more; to be more productive and to innovate,” he said.