Dana Mae D.

Salgado February 28, 2017

2015-00587 Econ 101 THDE
BUSINESS / ECONOMY
PCC: OPEN CONSTRUCTION BUSINESS TO FOREIGNERS
By: Roy Stephen C. Canivel - @inquirerdotnet
Philippine Daily Inquirer / 12:16 AM February 24, 2017
http://business.inquirer.net/225094/pcc-open-construction-business-foreigners
The competition watchdog said P210 billion more would be invested in the private sector if the
government changed the licensing rules being followed in the construction industry.

In a policy note posted on its website, the Philippine Competition Commission (PCC) renewed its
call to address the nationality distinction that provides more flexible rules to domestic contractors
in the construction industry, while restricting the access of foreign ones.

PCC said opening the market to more players would invite additional investments in the private
market, while also boosting the public sector through knowledge transfer and the use of new
technologies.

PCC estimates that the lifting of the restrictions on foreign contractors will yield an additional
P210 billion worth of private construction activities in these segments, the policy note read. PCC
did not quantify the gain on the part of the public sector.

The regulation in question, which PCC said violates the constitutional state policy against unfair
competition, referred to the implementing rules and regulations (IRR) of the Contractors License
Law.

According to the IRR, the Philippine Contractors Accreditation Board (PCAB) should license local
contractors on a yearly basis, while mandating foreign contractors to renew licenses for each new
construction project.

Nationality-based distinctions are not mere labels and, in fact, carry with them substantial
distinctions in terms of costs and benefits. It is a restriction that hinders competition in the
construction industry, creating an uneven playing field between local and foreign contractors, the
policy note read.

PCC added this hindered the potential of economic growth, especially since a foreign firm pays up
to 12 times more in application fees compared to a local firm doing the same level of activity.

Citing a simulation of 12 projects in a year, PCC said a local firm would pay P14,730 in license
applications, while its foreign counterpart would spend P176,760.

The scheme fosters an uneven playing field between local and foreign contractors, thereby
discouraging potential foreign firms from entering the market, PCC said.

PCC cited detrimental effects on the economy and business down to the consumers.

The antitrust body said the practice would result in a less competitive market especially when
there is a limited threat of entry of a potential competitor.

In December last year, the PCC filed an amicus curiae (friend of the court) brief with the Supreme
Court, commenting on an ongoing case between the PCAB and Manila Water Company, Inc.

The watchdog asked the high court to nullify the restrictive sections in the IRR, which, it believed,
would help open up the market.
Dana Mae D. Salgado February 28, 2017
2015-00587 Econ 101 THDE
BUSINESS / ECONOMY
HEADLINE HOGGING PH SCARES OFF EUROPEAN INVESTORS
By: Roy Stephen C. Canivel - @inquirerdotnet
Philippine Daily Inquirer / 12:18 AM February 23, 2017
http://business.inquirer.net/225044/headline-hogging-ph-scares-off-european-investors
Some multinational companies are postponing their expansion plans in the country due to the
political uncertainty threatening their businesses, according to an official of a group representing
European investors.

As harsh as it sounds now, the Philippines is in the European headlines almost on a weekly
basis. I dont want to say that we appreciate those headlines, but it basically brings in a lot of
questions, said European Chamber of Commerce of the Philippines (ECCP) executive director
Florian Gottein.

He said political controversies in the Duterte administration were turning off some members of the
European business community, with one company even opting to expand elsewhere in the Asean
region.

I think its as series of statements over the last weeks and months which caused that decision.
Its basically uncertainty. Business can live with risk, but uncertainty is something difficult to plan.

On the sidelines of a business forum, Gottein told reporters that two firms have disclosed their
plans to the ECCP as early as the latter part of 2016. One firm is in the information technology
industry, while another is in manufacturing.

This was around the time when President Duterte threw insults at members of the international
community, including the European Union, which criticized the administrations bloody war on
drugs.

They were thinking about doubling actually their investment, but the headquarters in Europe
decided at that moment to put it on hold. There was another company that also wanted to double
its investments, then decided to expand operations in Vietnam rather than in the country, he
disclosed, but refused to name the companies.

The expansion plans would have had added 5,000 more jobs in the country.

To recall, ECCP president Guenter Taus said late last year that the growing pile of bodies in the
governments war on drugs had created a sense of uncertainty among European investors.

The ongoing drug war, with the body count exceeding 7,000, is seen by some stakeholders as a
distraction to an otherwise promising growth story of the Philippine economy.

Gottein said ECCP was already trying to pacify firms, telling them that the environment in the
Philippines still offered a lot of opportunities.

Firms, however, were beginning to realize alternative options elsewhere in the Asean region.

The ECCP is set to hold the Asean-EU Business Summit here in the country next month.

The summit, which would be attended by EU Trade Commissioner Cecilia Malmstrm among
other notable leaders, aims to strengthen ties between EU and the Asean and to support existing
trade arrangements with the Philippines.
Dana Mae D. Salgado February 28, 2017
2015-00587 Econ 101 THDE

BUSINESS / ECONOMY
NEW GUIDELINES ON PH-CHINA TRADE, INVESTMENT RELATIONS
READY IN MARCH
Philippine Daily Inquirer / 12:10 AM February 25, 2017

The new Chinese commerce minister would soon sign a set of guidelines that would further boost
bilateral ties between China and the Philippines and even stand the test of laws, the Chinese
envoy to Manila said yesterday.

Chinese Ambassador Zhao Jianhua told businessmen and policymakers in an investment forum
in Makati that the cooperation between the two countries must be corruption-free and mutually
beneficial.

It is a very important part for the coming visit of the new commerce minister of China. He will sign
together with his counterparts guidelines which would guarantee that proper and legal procedures
to be followed, he said in his speech.

Test of laws

He did not expound on the details of the guidelines but noted that the cooperation between both
sides would be rule-based, transparent and will stand the test of time, stand the test of laws.

Trade Secretary Ramon M. Lopez said that this explained the last-minute postponement of
Chinese Commerce Minister Gao Huchengs Manila visit, which was initially suspected to be due
to rising tensions between the Asian powerhouse and the Philippines following recent comments
by Foreign Affairs Secretary Perfecto Yasay.

Internal meetings

Thats why the visit was postponed. They had those internal meetings that would decide on the
new reassignments, he said in a text message to reporters also yesterday.

According to Francis T. Chua, chair emeritus of the Philippine Chamber of Commerce and
Industry, the new Chinese minister was named Zhong Shan.

Tourist arrivals

In his speech, the Chinese envoy said that tourist arrivals of Chinese nationals would hopefully
reach close to a million this year from only 500,000 in the previous yearone of the lowest among
Asian countries when compared to nearly 10 million Chinese tourists in Thailand and close to 6
million Chinese visitors in Japan.

He also said that investments would soon be balanced as he noted that there were more Filipino
investments in China instead of the other way around.

This comes as President Duterte signed agreements late last year that generated pledges for
multibillion-dollar projects in the Philippinessignaling a change in foreign policy that previously
favored the United States over the regional powerhouse.

Shan is expected to make his visit to the Philippines next month. ROY STEPHEN C. CANIVEL