PHNO-MANILA STANDARD: BUSINESS CLIMATE REVISITED

MANILA STANDARD: BUSINESS CLIMATE
REVISITED
MANILA, JULY 6, 2012 (MANILA STANDARD) By Manila Standard
Today - There must be something wrong in the investment conditions in the
Philippines when big foreign companies with name brands leave and settle
somewhere else. The decision of the Ford Group last week and FedEx much earlier
to pull out their investments from the Philippines could be a reflection of a
systemic flaw in the way authorities treat foreign companies.
Ford Group Philippines last week announced that it would close its production
plant by the end of the year, citing low operational efficiency and consumer
demand and the lack of a broad domestic supply base as the main reasons for the
stoppage.
Local automotive parts companies were the first to set the alarm bells
ringing soon after Ford decided to shut down its Laguna plant. The Motor Vehicle
Parts Manufacturers Association of the Philippines warned that many of its
combined 50,000 workers could be displaced once Ford stopped its Philippine
operations.
Association president Ferdi Raquelsantos tasked the government to look at the
reasons why Ford was closing shop. "Why are companies like them relocating their
production operations to our neighboring countries like Thailand, India, China
or even Vietnam?" asked Raquelsantos. "Why are some investors shying away from
the Philippines? What incentives are given to them by our neighbors that we do
not give? Why is our demand low? Why are our production costs and prices
relatively higher?"
Raquelsantos left a poser that the first-quarter investments data can sum up.
The total investment pledges approved by promotional agencies like the Board of
Investments and the Philippine Economic Zone Authority in the first three months
of 2012 dropped to P18.4 billion year-on-year, the lowest recorded since the
second quarter of 2010, according to the National Statistical Coordination
Board.
Beyond the concerns over the small market, foreign investors need lower
production costs and a stable business climate to plan ahead. The Philippines
offers the most expensive electricity rates in this part of the region while the
government has flip-flopped on certain economic decisions, like what is
happening in the mining sector.
The government has also alienated the big foreign investors like Germany's
Fraport by treating the airport controversy as a legal matter instead of an
economic issue. President Aquino, as the highest official of the land, has all
the powers to lure foreign investors to the Philippines. Sadly, he lacks the
political will to do so.


Chief News Editor: Sol Jose Vanzi
© Copyright, 2012 by PHILIPPINE HEADLINE NEWS ONLINE
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rights reserved




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