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: ksafan City/State/Country: riyadh IP Address: 22.214.171.124
I can only agree on every point raised by the writer. Our justice system is so sick that we don't see any short-term cure. From RTCs issuing TROs here and there making it futile for Customs to go after smugglers to suspicious issuances of CA to delays in trials. Corruption is so widespread that we too don't see an end to it soon. Corrupt politicians and police officers are just too many to count. Rules change at the whims of politicians. Take for example the truck ban in Manila by Estrada; businesses are at the losing end and for sure it will result in job loses.
City/State/Country: Montreal, Canada IP Address: 126.96.36.199
Most investors look for growth, income, & good return on investments. Right now, U.S. companies have $1.8 trillion in cash. They can be invited to invest some of it in the Phils by offering them very good deals, lower labor cost, no unionized workers, & a lot of tax incentives. Our
gov't must drastically change that stigma of being unrealiable. Change it to something that works & not counter-productive. What is Indonesia offering that they are getting 4 times of the foreign investments in Asia? They are doing much better in attracting investors. First, our poor image of being a corrupt country must be solved now. Let's start convicting corrupt politicians & level the playing field with honest & trustworthy leaders.
Name: Donald Duct City/State/Country: Orlando, Florida USA
IP Address: 188.8.131.52
Philippines is mostly run by uneducated Congressmen and Senators that is why foreign companies will have a hard time establishing their business in the Philippines. Take a look who are the influential politicians in the government? Actors, TV personalities and the family dynasties. My former company wanted
to establish an engineering firm to do the CAD designs of all our international building projects. But my Boss (married to a Filipina) saw how corrupt our government
was and decided to establish the company in Shanghai instead.
Name: Jorge Villanueva City/State/Country: Canada IP
It is unfortunate that the Philippines appears to have a regressive environment for business. It is never the desire for the country to be perceived that way but it is an inevitable result of the culture of corruption. Precisely, why it is highly imperative now for its leader and the people to change that image and make the world notice its resolve to curb corruption.
Name: Phil Researcher City/State/Country: LA County, CA USA
IP Address: 184.108.40.206
Re: Corruption in the P.I. It is S.O.P. (standard operating procedure) for foreign businessmen to deal with government. Big businesses hire the most prominent lawyers to hurdle the local requirements.
Part of the local requirement is... bribery..So many businesses instead of going to the P.I.. they prefer to do business in Thailand or Malaysia or other Asian countries instead of the notoriously corrupt P.I... Just look at the number of tourists going to other countries like
Hong Kong Singapore, etc. The P.I. is very far behind.
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