n the surface, the
Philippines can seem like an enjoyable and friendly place to do business.
But scratch the surface and you’ll find yourself in a strange and alien
world where a whole new set of rules and attitudes apply.
Just recently, the Fraser
Institute, a well-known North American think-tank, ranked the Philippines
third from the bottom, on its annual survey of the best places to do
business for mining companies. The country is missing out on multi-billion
dollar foreign investments—not to mention the thousands of jobs new
businesses can provide—simply because foreign companies see the Philippines
as unreliable. Rules can change mid-stream, and local jurisdictions can
impose ever increasing requirements. The country already suffers from a
history of failed business projects where foreign investors were left
“holding the bag.” A prime example is the construction of NAIA Terminal 3
where German airport services firm Frapport AG found itself entangled in a web
of government agencies, bureaucrats, the courts, and the previous
Gloria Arroyo administration. Unfortunately for Frapport AG, a simple
straightforward airport project turned into a nightmare. Sadly Fraport AG’s experience is in
no way an isolated
case. These things happen all the time in the Philippines where there is no
requirement for full disclosure and all parties to a deal—no matter how
minor—usually have another secret deal going on the side.
Although the Philippines
has recently improved its overall credit rating, that improvement has not
translated into a significant boost in foreign direct investments to the
country. In fact Indonesia continues to receive four times as much foreign
investment even if it now rates lower than the Philippines. Why? As we point
out above, the reason is the Philippines has, over the years, built a
reputation of inconsistency and unreliability, in addition to widespread
corruption, a poorly educated populace, inadequate infrastructure, and a
hopelessly ineffective judiciary.
From large multinational
corporations to mom-and-pop businesses started by balikbayans, many
entrepreneurs who set up shop here in the Philippines, have since left in
frustration. Many point to the
almost whimsical attitude of local officials who seem to delight in giving
businesses a difficult time simply to prove to everyone that they can. When
business owners realize that the odds are stacked against them despite
their best efforts, they close shop and move elsewhere. And in today’s world
of global connectivity, that could be anywhere else outside the Philippines.
The recent pork-barrel
scandal that is currently all over the news also highlights just how
widespread and far-reaching corruption is in the country. Sitting senators
who took an oath to serve the people are now accused of serving only
themselves to the tune of tens of millions of pesos. They are now fighting
tooth-and-nail to exonerate themselves. And why shouldn’t they, others
before them stole much more yet never spent a day in jail.
It may seem
counterintuitive to some but Philippine courts have a lot to do with
improving the business climate of the country. Government officials can offer
all kinds of business incentives and talk till they’re blue in the face. But
unless the Philippines has a properly functioning judiciary, reputable
foreign businesses will have to think long and hard before they ever invest
or set up shop here.
Philnews.com reserves the right to select and edit comments for publication.
Name: Enteng D'Dragon City/State/Country: Pulo ng mga mahangin
IP Address: 18.104.22.168
Ed pointed out -"Many point to the almost whimsical attitude of local officials who seem to delight in giving businesses a difficult time .. "- That is only part of the reason why RP is in the basement level. Greater reason is the "attitude of the people" when it comes to seeing " opportunity" to plunder when given the chance! In 1998 I brought with me Canadian capital and investors and invested over CDN$2M as seed money for a trading venture. A year later, I was told that our local (Filipino) managers established their own taxi business. I investigated and found out that they advanced the funds from our treasury (they're supposed to manage) with the admonition that-- we should not worry because they will deduct the payment from their salaries!!. In less than a year-- we closed shop!
Name: SOMEONE City/State/Country: SOMEWHERE IP
It is not just the government thieves driving business away but also the militant, unreasonable Unions. For a country badly in need of manufacturing companies the workers allow themselves to be sweet talked by Communists to make trouble by making all sorts of demands. And notice that as aggressive as they were in dealing with foreign investors/employers they do not show such aggressiveness in dealing with thieving politicians. You wonder why? It's as if they have already accepted the crookedness in their government and have made adjustments for it. The rest is fair game. If you were a foreign investor and you could get the same thing manufactured somewhere else without this pestering unions, wouldn't you?
Name: JRH City/State/Country: Montreal, Canada IP
Apply the 'keep it simple' formula by eliminating red tape, high business fees, easy one-stop processing, tax break, tax break, & more tax breaks. In other words, a drastic overhaul of the old system for it to work. It shows that the Phil did not become a better country after the Edsa Revolution but instead got into deeper misery in attracting foreign investors. Instead of instituting good strategy our politicians concentrated in enriching themselves. If we want a progressive country we must have true commitments & a better system to attract investors. If we can't do that then this problem stays. It's like cancer that's incurable. So, simplify the process & give more incentives. Sticking to the old system will not solve this problem. So, wake up & just do it.
Name: Paco Sa Cruz
City/State/Country: Vietnam IP Address: 22.214.171.124
Gone are the days when the winning politicians are branded as "abogado di kampanilya". After Marcos was removed from power and Cory took over along with the "abogago di kampanilya", we have not recovered from the corrupt system put in place by Marcos. The useless COMELEC in the pretense of protecting democracy, allow every kind of monkey to run for an elected position and movie stars and other popular personalities, started to rule the country. The best and the brightest were replaced by popular no-brainers and products of corrupt political dynasty. Election become useless as unqualified personalities continue to win and the country is left with corrupt and self-serving politicians resulting in an unwanted business environment aptly described in this article.
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