DOF wants some areas open to foreign capital

With the government moving toward achieving rapid, inclusive and sustained economic growth, the Department of Finance (DOF) is pushing for a number of reforms including opening up some investment areas to foreign nationals, harmonizing Þscal incentives, and reviving the mining industry.

Finance Secretary Cesar V. Purisima said the government is lobbying for the passage of several key economic measures when Congress opens for the next legislative session in July

These reforms, he said, are geared toward increasing foreign and domestic investments in the country and creating new jobs.

These measures include the fiscal incentives bill, a new revenue sharing scheme between government and mining firms, the transparency and accountability bill, and the amendment of the BOT (build-operate-transfer) law and the charter of the Bangko Sentral ng Pilipinas (BSP).

The fiscal incentives bill, which has been pending in Congress, seeks to rationalize perks given by state agencies to investors. It expected to bring in more revenues for the government once

signed into law, allowing the country to sustain its robust fiscal performance beyond 2016.

Purisima said the government is also considering lifting foreign investment restrictions in some areas to attract more investments into the country and further spur economic growth. He, however, pointed out that the review would not include economic restrictions in the Constitution.

“I don’t have the inventory yet but we’re looking at what can reasonably be opened up that will not require Constitutional change. Obviously ownership of land is not among them because it requires constitutional change. We’ll have a short list and have a consultation and then come up with a list we can present for the President’s review and consideration,” he said.

Purisima said one of the areas that may be opened up to foreign nationals is the practice of professions. He, however, was quick to point out that nothing has been finalized yet and that everything is still under study.

“The criteria for choosing sectors would be what will help us create more jobs, what will help us develop more skills, what will help us build a better business environment so that we can continue to accelerate growth in the country. We should also consider areas not properly served so all of us will benefit if we bring in people with the technology and capital,” he noted.

There are 45 laws governing the practice of specific professions, and 40 contain “reciprocity” provisions allowing foreigners to practice their profession in the Philippines provided their countries of origin also allow Filipinos to practice these. Aside from this, a Supreme Court rule limits the practice of law to Philippine nationals.

Other professions restricted to Philippine nationals and contain no reciprocity provision are include criminologists, environmental planners, foresters, pharmacists, and radio and X-ray technologists.

The Joint Foreign Chambers in the Philippines has long been pushing for the removal of some restrictions, particularly on the practice of all professions.

The Foreign Investor Negative List, which identifies the business activities that are reserved for Filipino nationals, was introduced as major reform in 1991. Although reissued every two years, the list barely made an impact in so far as boosting foreign investments into the Philippines is concerned.

Net FDI inflows remain very low in the Philippine compared to its neighboring large Asean economies which allow full foreign ownership.

Purisima said the government is also hopeful that a new revenue sharing formula in mining and exploration will finally be implemented as it seeks to further develop the industry and take advantage of the country’s vast mineral resources.

The Philippines has some of the richest geology in the world, with potentially the world’s third-largest deposits of copper and large amounts of gold, nickel and zinc. The Philippines also sits near one of the world’s biggest markets, China.