Long standing issues prompt EU to avoid investing in RP

MANILA, Philippines - The Philippines remains outside the European Union’s investment radar since it is still plagued with its long-standing problems. The Philippines’ corruption, lack of infrastructure, poor governance, unsound business policies, and weak rule of law continue to turn off European investors, a top diplomat said. Besides lagging behind its Asian neighbors in terms of European investments, the Philippines’ economic performance has not been exactly impressive, Ambassador Alistair MacDonald, head of the delegation of the European Commission, said on Tuesday. As a result, the trade between the European Union (EU) and the Philippines has fallen by two percent on the average since 2002. However, during the period, EU trade with other middle-income Association of Southeast Asian Nations (Asean) has been growing by an average of 6 percent a year. Last year, Philippine exports to the 27-member states fell by six percent. During the period, Asean exports to EU only declined by two percent. From 1995 to 2006, the Philippines received only $1.8 billion in net foreign direct investments while Singapore got $58.3 billion, Malaysia $11.4 billion, Indonesia $7.6 billion, Thailand $7.3 billion, and Vietnam $ 3.8 billion. Although the country doesn’t face any immediate crisis, “the [country’s] need for reform in the longer term remains acute," he said. The country’s “growth constraints" – emphasized in recent reports by its development partners – prompted foreign businessmen to place their investments elsewhere, he said. MacDonald cited a World Bank report, which said that the Philippines has an “oligopolistic nature of crucial elite-captured markets in capital intensive sectors such as energy, cement, and transport." This has resulted in “limited tax collections, hampering public capital spending and undermining private investment," the World Bank report said. Similarly, MacDonald also cited a report made by the Asian Development Bank (ADB) which said that the country was burdened with “inadequate infrastructure, especially in electricity and transport, poor governance and critical market failures." - GMANews.TV