ATTRACTING foreign direct investment (FDI) remains hampered by ease of doing business issues, the limited supply of skilled workers, and inadequate infrastructure, the Bangko Sentral ng Pilipinas (BSP) said in a blog post.
Attracting FDI “remains a challenge for policymakers in the Philippines,” it said in the blog post dated March 18.
The post, written by Marie Edelweiss G. Romarate, Ferdinand S. Co, and Hazel C. Parcon-Santos, also discussed the results of the business climate survey conducted by the BSP Research Academy in 2023.
The survey found that respondents “time spent in securing necessary business permits” as a key challenge to establishing their businesses.
It also cited concerns like red tape, finding workers with appropriate skills, arranging for utility connections, and corruption.
“The responses suggest that a significant portion of the challenges encountered by businesses in establishing themselves in the Philippines is associated with the inherent costs of regular business operations,” it said.
It cited these costs as including land, utilities, labor, permits, raw materials, and logistics.
“Additionally, certain challenges are linked to procedural and regulatory aspects, reflecting the country’s legal, political, and regulatory environment. Examples include delays in obtaining essential permits/licenses, instances of corruption, and the legal framework,” it said.
The post also noted that the survey results showed that businesses found it difficult hiring workers with the requisite skills as well as retaining them.
“This suggests that the existing labor pool in the Philippines does not possess the skill sets required by these companies,” it said.
“Furthermore, businesses highlight that the quality of infrastructure, including roads, bridges, ports, shipping, and warehouses, can impact their operations.”
The post also cited a previous discussion paper in 2021 that noted the Philippines’ low ranking in terms of FDI inflows compared to its neighbors.
“The Philippines, meanwhile, has faced challenges in improving its ranking, consistently landing at the 4th or 5th position in total FDI inflows per decade since the 1990s,” it said.
“Notably, among the ASEAN-5 nations, only the Philippines has never secured the top position in FDI inflows throughout past decades, with its highest ranking being 2nd in 1998.” — Luisa Maria Jacinta C. Jocson
