By Riza Lozada
The government has agreed in principle to back the relaxation of the negative list for contractors to allow foreign-controlled firms to enter the booming construction activities in the country.
Public Works and Highways Secretary Rogelio Singson made the assurance recently to EU Ambassador to the Philippines Guy Ledoux before a gathering of high ranking public and private officials, as well as European executives.
Data from EU showed investments from the economic bloc to the country grew 58 percent last year.
The Board of Investments (BOI) also said it would consider proposals to relax the foreign investments negative list as part of its so-called roadmap to improve the investments climate in the country.
Singson told EU officials that foreign contractors with excellent records or the so-called quadruple “A” contractors would be allowed in the construction sector.
The EU has challenged the government to liberalize economic policies and institutionalize reforms in governance.
Among its proposals are the review of the constitutional limits on foreign ownership; providing a solution to the energy supply and costs problems and port congestion; rationalization of fiscal and non-fiscal incentives; and the strengthening of competition laws.
These proposals were contained in the EU Business in the Philippines Network (EUBPN) advocacy paper which Ledoux said was the first time that the EU came up with a consolidated, European industry-driven advocacy paper…as a basis for creating a constructive dialogue with Philippine authorities.”
Trade between the Philippines and the EU grew by 15 percent in 2014 to 12.5 billion euros while EU investments increased 58 percent to P50 billion in the same year.
The European business proposals were also presented during the recent 2nd EU-Philippines business dialogue with Socioeconomic Planning Secretary Arsenio Balisacan.
During the meeting, Balisacan, also the head of the National Economic and Development Authority (NEDA), said the Aquino administration is pursuing the enactment of an antitrust or fair competition law to assure a level playing field for business and also promote the growth and development of SMEs.
“We are similarly promoting additional reforms such as the rationalization of fiscal incentives and amendments to the build-operate-transfer (BOT) law,” he said.
“On the amendment of specific laws cited in the Foreign Investment Negative List, the Economic Development Cluster, already endorsed three bills to the Senate, which includes lifting investment restrictions on adjustment, lending, and financing companies or Senate Bill 2517; specific laws governing the practice of professions; and contracts for the construction and repair of locally-funded public works; and contracts for the supply of materials, goods, and commodities to government-owned and controlled corporation, agency or municipal corporation,” Balisacan said.
Trade and Industry Secretary Gregory Domingo, meanwhile, said the Department of Trade and Industry will thoroughly review the EPBN advocacy papers as a basis for the formulation and implementation of reform roadmaps.
The EU, however, in its sought reforms gave particular emphasis on amending restrictive economic provisions of the 1987 Constitution through Speaker Belmonte’s House Joint Resolution No. 1, review of 60-40 nationality ownership requirements, and revision of the Foreign Investment Negative List, all aimed at making the country’s constitutional and legal frameworks more responsive to the entry of foreign investments.
The European Chamber of Commerce of the Philippines (ECCP) led by President Michael Raeuber and other heads of EU national chambers of commerce forming the EPBN consortium offered leading Philippine economic managers a concrete set of cross-sector and sector-specific issue analyses and recommendations defined in the EPBN Advocacy Papers.
During the dialogue, the ECCP also called on Singson to build a connector road leading from the NLEX-SLEX connection to ports as one option to help avert the reemergence of port congestion in Manila.
The European business group noted the government effort on opening up to foreign contractors participation in the local infrastructure development projects, in particular emphasizing the infrastructure program worth P18 billion in 2016 to sustain its economic growth.
The EUBN said “Singson unveiled government plans to issue the guidelines for a new license category (Quadruple A) allowing foreign entities to acquire construction permits not only on a per-project basis but as regular contractors.”
In response to Grundfos Managing Director Rick Holland’s confirmation that limited foreign participation in the country’s water sector remains to be a challenge, Singson encouraged private sector stakeholders to explore water resource management joint projects and capital ventures with water districts.