Lending firms urge RP to open up economy

Multilateral lending agencies urged the Philippines to further open up its economy to boost the country’s competitiveness and at the same time attract much needed foreign direct investments. Joachim von Amsberg, Philippine country director of the World Bank, told reporters that the lack of foreign direct investments in the Philippines could be traced to its reluctance to further open up its economy. “There are little investments in the Philippines. One of the barriers to entry was holding back others from entering the market, investing, and bringing prices down," Von Amsberg stressed. He said the overall investment rate of 15 percent of gross domestic product (GDP) in the Philippines is extraordinarily low and puts questions about the sustainability and achievability of higher economic growth. He cited the need to implement actions to increase the investment rate to 20 percent of GDP or higher to make it more typical of comparable economies in the region. By opening up the economy, he pointed out that the entry of new players would bring in competition that would help bring down the cost of doing business in the Philippines. He stressed the need to open up and increase competition in airline, power, port and other sectors. According to him, the introduction of an open skies policy nationwide or for specific airports such as the Diosdado Macapagal Arroyo International Airport in Clark, Pampanga would help bring in additional tourists into the Philippines. He also stressed the need to bring in competition in the port industry to help bring down the costs. A study conducted by the World Bank showed that the Philippines has relative quick export time of 18 days and customs clearance of four days but has the highest cost to export among countries in Southeast Asia and China. Export cost in the Philippines is pegged at $1,336 per container compared to Thailand’s $848, Singapore ’s $382, and China ’s $335 per container. Furthermore, the Philippines has the highest power cost of 13.6 US cents per kilowatt-hour compared to Singapore’s 10.6 US cents, China’s 8.2 US cents, and Thailand’s 7.2 US cents per kwh. Agriculture Secretary Arthur Yap said the deregulation of key industries particularly the ports was one of the major issues raised by multilateral lending agencies during the two-day 2007 Philippine Development Forum in Cebu City last week. Yap said there is a need for government financial institutions led by Development Bank of the Philippines (DBP) to aggressively pursue funding private companies as well as local government units (LGUs) that are willing to invest in the roll-on roll-off (Ro-Ro) system and port facilities. “This is going to be critical to sustain growth by keeping the flow of goods moving," he said. Meanwhile, Trade Secretary Peter Favila told reporters that there is a need to align the country’s aviation policies as well as that of the Philippine Ports Authority with that of the government’s efforts to improve national competitiveness. “This is something that out development partners had kindly expressed their willingness to support us in crafting new policies precisely to address these issues," Favila said. The government has jacked up official development assistance borrowings to $1.466 billion this year from the programmed $854 million last year. These loans carry cheaper interest and better repayment terms compared to funds sourced from commercial sources. It has presented to agencies led by World Bank, Asian Development Bank and Japan Bank for International Cooperation a total 10 priority projects worth P83 billion led by the proposed Light Rail Transit to Cavite (P35.5 billion) and the extension of the North Luzon Expressway (P19.4 billion). - GMANews.TV