Will the Philippines Now Attract More Foreign Investment?
Newly Elected President Duterte May Just Pull it Off
I am involved in a business in the Philippines that will thrive or die on foreign investment to this country, and during the recent elections I automatically assumed that should Duterte come to power, people might be scared to invest in the Philippines which would have negative consequences to our business. Imagine my pleasant surprise this week when a Duterte Presidency was assured, and one of his immediate announcements was that he was committed to bringing foreign investment into the Philippines. His intention is to rewrite sections of the constitution that now exist which are extremely limiting to foreign ownership of corporations. Currently, foreigners are barred fully from ownership of business in several industries and in those that they are allowed to invest in, the maximum stake of foreign ownership is limited to 40%.
These limitations have been a huge obstacle of attracting foreign investment to the Philippines as very few people would consider investing in a venture in which their control is limited. There are legal ways a foreigner can protect an investment , however these methods are tricky, complicated and usually walk a thin line between a valid partnership with Filipinos and the law breaking practice of having “dummies”. In the majority of cases, Foreign Investment into a Filipino company is usually comfortable only to those foreigners who have a filipino(a) spouse that they trust fully.
That Duterte is considering this move is showing an astuteness that I and many others did not give him credit for. The fact is that he has ambitious goals in regards to social programs, infrastructure and government service. To achieve these goals will take money, and far more of it than can be ever raised through the domestic economy. With his intended platform of discipline there will come a time when his policies start to affect the daily life of ordinary Filipinos in ways that they probably did not imagine during the election. When the police come knocking on the door of the ordinary Filipino telling them to turn off the videoke machine or put away the Emprador and Red Bull, there will be resentments. Should the everyday Filipino be sitting at home hopeless without a job or financial prosperity, social unrest would develop which will quickly take the shine off the brave new world they voted for. However, if Duterte can accomplish his goal of attracting more foreign investment into the Philippines, and he cleans up the government corruption so that the the ordinary Filipino will get a taste of the country’s prosperity foreign investment will bring, it indeed will be a brave new world.
For one, I hope he is successful in his attempt to lure more foreign investment to the shores of the Philippines. It will be good for everybody.