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In the News: RP Among Most Restrictive in Foreign Investments (Manila Standard, Jul 8, 2010)

July 9, 2010

A July 8, 2010 article filed by Roderick dela Cruz in the Manila Standard shows that the Philippines is among the “world’s most restrictive countries in allowing foreign capital into the economy“.

Who are we really protecting? The Filipino Oligarchy or the Filipino Consumer?

RP among most restrictive in foreign investments
by Roderick T. dela Cruz

THE World Bank has listed the Philippines as among the world’s most restrictive countries in allowing foreign capital into the economy.

“Among the 87 countries covered by the Investing Across Sectors indicators, the Philippines imposes foreign equity ownership restrictions on more sectors than most other countries,” said a new World Bank report called Investing Across Borders 2010.

The Philippines was lumped along with Ethiopia and Thailand with an indicator score of 0 for several sectors.

By comparison, more than a quarter of the 87 countries surveyed had few or no sector-specific restrictions on foreign ownership of companies. Countries with no restrictions received a full index score of 100. The main indicators in the study included the process of starting a foreign business❗ , access to industrial land❗ , and commercial arbitration regimes❗ .

The Philippines aside, the other economies that restrict foreign ownership in a third or more of the sectors were Bolivia, China, Ethiopia, Greece, India, Indonesia, Malaysia, Mexico, Morocco, Saudi Arabia, Sudan, Thailand, and Vietnam. The 200-page study covered various indicators of foreign direct investment regulation in 87 economies.

The Philippines, along with Bosnia and Herzegovina, are listed as the only nations that do not allow foreign companies to lease public land.❗

The Philippines also received poor scores for imposing ownership limitations on many industries, in particular on the primary and service sectors.❗

The World Bank study notes that foreign capital participation in the country’s mining and oil and gas industries is limited to a maximum share of 40 percent by the Philippine Constitution, although it acknowledges that foreign ownership in those sectors may be allowed up to 100 percent if the investor enters into a financial or technical assistance agreement with the government.

 In the service sectors, the Philippine Constitution limits foreign capital participation in public utilities such as telecommunications, electricity and transportation to a maximum of 40 percent.❗

Newspaper publishing and television broadcasting are closed to foreign equity ownership.❗

“It takes 17 procedures and 80 days to establish a foreign-owned limited liability company in Manila, slower than both the average for East Asia and the Pacific and the global average,” the World Bank report says.

The study notes that two additional procedures are required exclusively of a foreign-owned company establishing a subsidiary in Manila: an authenticated and legalized copy of the documents of the parent company abroad and another set of registration documents with the Bureau of Customs.

“This registration usually takes 27 days,” the report says.

It ssays the Philippine Constitution also prohibits foreign companies from buying land and the best option available is to lease private land. A foreign company’s exercise of rights over the land such as subleasing, subdivision, or making improvements is limited by the terms of the lease contract.❗

In the Philippines a foreign company cannot mortgage leased land or use it as collateral to buy production equipment.❗

Another problematic area is arbitration, where it takes around 135 weeks to enforce an arbitration award rendered in the Philippines—from the filing of an application to a writ of execution attaching assets (assuming there is no appeal)—and 126 weeks for a foreign award.

“Enforcement of arbitration awards is slow in most of the region, taking more than a year in the Philippines and Thailand.”

Countries in Eastern Europe and Central Asia and Latin America and the Caribbean are said to be the most open to foreign ownership of companies. Worldwide, restrictions on foreign ownership are strictest in media, transportation, electricity, and telecommunications industries.

The report says overly restrictive and obsolete laws are an impediment to foreign direct investment and their poor implementation creates additional costs to investment.❗

“Foreign direct investment is critical for countries’ development, especially in times of economic crisis. It brings new and more committed capital, introduces new technologies and management styles, helps create jobs, and stimulates competition to bring down local prices and improve people’s access to goods and services,” said Janamitra Devan, vice president of Financial and Private Sector Development of the World Bank Group.

The report found that countries that do well on the Investing Across Borders indicators also tend to attract more foreign direct investment relative to the size of their economies and population.

On the other hand, countries that score poorly tend to have higher incidences of corruption😯 , higher levels of political risk😯 , and weaker governance structures😯 .

The World Bank says the report is intended to help countries develop more competitive business environments by identifying good practices in investment policy design and implementation.

***

For your convenience, the pertinents provisions in the 1987 Constitution and the Foreign Investments Negative List are provided below.  I will comment on some of the provisions – and you can follow the lead. The items I have not commented on will be left as items tobe covered in the comment threads.

Protectionism in the 1987 Philippine Constitution

ARTICLE XII
NATIONAL ECONOMY AND PATRIMONY

Section 1. The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity as the key to raising the quality of life for all, especially the under-privileged.

The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices. (BV:  Definition of unfair is ambiguous, how about Filipino companies that resort to unfair competition? )

In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given optimum opportunity to develop. Private enterprises, including corporations, cooperatives, and similar collective organizations, shall be encouraged to broaden the base of their ownership.

Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant.

The State shall protect the nation’s marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.

The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fish- workers in rivers, lakes, bays, and lagoons.

The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources.

The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution.

Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands and national parks. Agricultural lands of the public domain may be further classified by law according to the uses to which they may be devoted. Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof, by purchase, homestead, or grant.

Taking into account the requirements of conservation, ecology, and development, and subject to the requirements of agrarian reform, the Congress shall determine, by law, the size of lands of the public domain which may be acquired, developed, held, or leased and the conditions therefor.

Section 4. The Congress shall, as soon as possible, determine, by law, the specific limits of forest lands and national parks, marking clearly their boundaries on the ground. Thereafter, such forest lands and national parks shall be conserved and may not be increased nor diminished, except by law. The Congress shall provide for such period as it may determine, measures to prohibit logging in endangered forests and watershed areas.

Section 5. The State, subject to the provisions of this Constitution and national development policies and programs, shall protect the rights of indigenous cultural communities to their ancestral lands to ensure their economic, social, and cultural well-being.

The Congress may provide for the applicability of customary laws governing property rights or relations in determining the ownership and extent of ancestral domain.

Section 6. The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands.

Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.

Section 8. Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the Philippines who has lost his Philippine citizenship may be a transferee of private lands, subject to limitations provided by law.

Section 9. The Congress may establish an independent economic and planning agency headed by the President, which shall, after consultations with the appropriate public agencies, various private sectors, and local government units, recommend to Congress, and implement continuing integrated and coordinated programs and policies for national development.

Until the Congress provides otherwise, the National Economic and Development Authority shall function as the independent planning agency of the government.

Section 10. The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos.

In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos.

The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national goals and priorities.

(BV: And this is how the Foreign Investments Negative List came about – see the list further down).

Section 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens; nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines.

(BV: And this is why the utilities are still in the hands of MERALCO, DAVAO LIGHT, MAYNILAD. They can keep on charging higher rates because thee Filipino businessman is protected.

There is NO WAY that any company with foreign majority owners will ever enter the Philippines and compete against the locals – because the Constitution prohibits it. The Filipino oligarchs win, the Filipino customers pay the bill. If MERALCO hikes the bill, there’s no one to turn to – no competitor to switch to. You can thank the Constitution for your high electricity rates.)

Section 12. The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and adopt measures that help make them competitive.

(BV: Import  substitution has not worked and has lead to higher prices of goods because of inefficient production. There are no alternatives because there are no competitors. The local producers are into collusion as well. The Filipino business owners wins  and their Filipino employees keep their jobs- but a larger number of  the Filippino people (the Filipino consumers/the Filipino customers)  bear the brunt of the business owners inefficiency – case in point MERALCO/PLDT).

Section 13. The State shall pursue a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of equality and reciprocity.

Section 14. The sustained development of a reservoir of national talents consisting of Filipino scientists, entrepreneurs, professionals, managers, high-level technical manpower and skilled workers and craftsmen in all fields shall be promoted by the State. The State shall encourage appropriate technology and regulate its transfer for the national benefit.

(BV: Protectionism has kept foreign investors away. Higher paying jobs, compared to dirt cheap jobs in the sweatshops of the Philippine oligarchy  (Ayala, Lucio Tan, Cojuangco, etc), are being kept away.

If the high paying jobs that keep the best and brightest happy are not available locally – the best and brightest will go overseas, very simple!)

The practice of all professions in the Philippines shall be limited to Filipino citizens, save in cases prescribed by law.

(BV: It’s ironic that we work in countries that allow people who are not their citizens (Filipinos) to work – and here we are limiting professions to Filipino citizens. In Cebuano we call this “bentahoso” – greedy. It’s someone who just takes and takes but does not give anything back. That’s the Philippines – puro hingi, bilmoko, keeps on taking – but doesn’t give back)

Section 15. The Congress shall create an agency to promote the viability and growth of cooperatives as instruments for social justice and economic development.

Section 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability.

Section 17. In times of national emergency, when the public interest so requires, the State may, during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any privately-owned public utility or business affected with public interest.

Section 18. The State may, in the interest of national welfare or defense, establish and operate vital industries and, upon payment of just compensation, transfer to public ownership utilities and other private enterprises to be operated by the Government.

Section 19. The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed.

(BV: Really? Tell that to the Marines – note the clause “when the public interest so requires”.

It can be interpreted that “public does not require regulating or prohibiting it yet so it is still okay to have monopolies” – ergo, PLDT, MERALCO, MAYNILAD by virtue of lack of competition are monopolies – and yet they operate.

When they raise their prices, you can only complain, you have nowhere to go – but them – that’s what monopolies are for. Take it or leave it – you have no choice. 

Section 20. The Congress shall establish an independent central monetary authority, the members of whose governing board must be natural-born Filipino citizens, of known probity, integrity, and patriotism, the majority of whom shall come from the private sector. They shall also be subject to such other qualifications and disabilities as may be prescribed by law. The authority shall provide policy direction in the areas of money, banking, and credit. It shall have supervision over the operations of banks and exercise such regulatory powers as may be provided by law over the operations of finance companies and other institutions performing similar functions.

Until the Congress otherwise provides, the Central Bank of the Philippines operating under existing laws, shall function as the central monetary authority.

Section 21. Foreign loans may only be incurred in accordance with law and the regulation of the monetary authority. Information on foreign loans obtained or guaranteed by the Government shall be made available to the public.

Section 22. Acts which circumvent or negate any of the provisions of this Article shall be considered inimical to the national interest and subject to criminal and civil sanctions, as may be provided by law.

(BV: There’s a lot of foreigners who are using dummies. Our laws encourage it. It also becomes a fertile ground for corrupt dealings. May foreigners are being ripped off. It gives a very bad image of the Philippines – and Filipinos, like you and I)

Protectionism in the Foreign Investments Negative List 

The FINL shows the depth of the Philippines protecionist investment policy. It shows the different sectors and their limits to FDI. N ote that no corporation can own more than 40% under the Constitution.

Thus, technically – all corporations in the Philippines are Filipino-owned (excluding of course those, foreign corporations within the export processing zones engaged solely in exports).

FIFTH REGULAR FOREIGN INVESTMENT NEGATIVE LIST
[Executive Order No. 139 dated October 22, 2002]

LIST A:
FOREIGN OWNERSHIP IS LIMITED
BY MANDATE OF THE CONSTITUTION AND SPECIFIC LAWS

No Foreign Equity

1.  Mass Media except recording [Article XVI, Section 11 of the Constitution; Presidential Memorandum Order dated 04 May 1994]. 

(BV: This is supposedly to protect Filipinos from “evil” foreign influence. Every Filipino must be given the right to determine for themselves what is “evil”  and what is “good”.  Preventing foreigners to own mass media is a form of censorship and prior restraint. 

Limiting ownership of mass media to irresponsible local Filipino companies like ABS-CBN is doing more harm than good. Our choices are limited between WORSE and WORST. )

2.  Practice of professions 1

a.  Engineering
 
i.  Aeronautical
ii.  Agricultural
iii.  Chemical
iv.  Civil
v.  Electrical
vi.  Electronics and Communication
vii.  Geodetic
viii.  Mechanical
ix.  Metallurgical
x.  Mining
xi.  Naval Architecture and Marine
xii.  Sanitary

 
b.  Medicine and Allied Professions
 
i.  Medicine
ii.  Medical Technology
iii.  Dentistry
iv.  Midwifery
v.  Nursing
vi.  Nutrition and Dietetics
vii.  Optometry
viii.  Pharmacy
ix.  Physical and Occupational Therapy
x.  Radiologic and X-ray Technology
xi.  Veterinary Medicine 

c.  Accountancy
.
d.  Architecture
e.  Criminology

f.  Chemistry

g.  Customs Brokerage

h.  Environmental Planning

i.  Forestry

j.  Geology

k.  Interior Design

l.  Landscape Architecture

m.  Law

n.  Librarianship

o.  Marine Deck Officers

p.  Marine Engine Officers

q.  Master Plumbing

r.  Sugar Technology

s.  Social Work

t.  Teaching

u.  Agriculture

v.  Fisheries

            (Art. XII, Sec. 14 of the Constitution; Sec. 1 of R.A. 5181)

3.  Retail trade enterprises with paid-up capital of less than US$ 2,500,00 (Sec. 5 of R.A. 8762) 2
 
4.  Cooperatives (Ch. III, Art. 26 of R.A. 6938)

5.  Private Security Agencies (Sec. 4 of R.A. 5487)

6.  Small-scale Mining (Sec. 3 of R.A. 7076)

7.  Utilization of Marine Resources in archipelagic waters, territorial sea, and exclusive economic zone (Art. XII, Sec. 2 of the Constitution)

8.  Ownership, operation and management of cockpits (Sec. 5 of P.D. 449)

9.  Manufacture, repair, stockpiling and/or distribution of nuclear weapons (Art. II Sec. 8 of the Constitution) 3

10.  Manufacture, repair, stockpiling and/or distribution of biological, chemical and radiological weapons and anti-personal mines (Various treaties to which the Philippines is a signatory and conventions supported by the Philippines) 3

11.  Manufacture of firecrackers and other pyrotechnic devices (Sec. 5 of R.A. 7183)

Up to Twenty Percent (20%) Foreign Equity

12.  Private radio communication network (R.A. 3846)

Up to Twenty-Five Percent (25%) Foreign Equity

13.  Private recruitment, whether for local or overseas employment (Art. 27 of P.D. 442)

14.   Contracts for the construction and repair of locally-funded public works (Sec. 1 of C.A. 541, LOI 630) except:
 a.  infrastructure/development projects covered in R.A. 7718; and
b.  projects which are foreign funded or assisted and required to undergo international competitive bidding(Sec. 2(a) of R.A. 7718)

15.  Contracts for construction of defense-related structure (Sec. 1 of C.A. 541)

Up to Thirty Percent (30%) Foreign Equity

16.  Advertising (Art. XVI, Sec. 11 of the Constitution)  (BV: Why?)

Up to Forty Percent (40%) Foreign Equity

17.  Exploration, development and utilization of natural resources (Art. XII, Sec. 2 of the Constitution) 4

18.  Ownership of Private Lands (Art. XII, Sec. 7 of the Constitution; Ch. 5, Sec. 22 of C.A. 141) (BV: Foreigners who are actively doing business in the Philippines should be allowed to own 100% of residential land and land for its corporate HQ during the time when the investment is actively employing Filipinos)

19.  Operation and management of public utilities (Art. XII, Sec. 11 of the Constitution; Sec. 16 of C.A. 146)  (BV: We need the option of switching to a better service instead of being stuck with lousy utilities like MERALCO and MAYNILAD – Allowing foreigners to own majority shares will encourage more investments that will compete against the lousy inefficient Filipino companies that rip-off the Filipino consumers)

20.  Ownership/establishment and administration of educational institutions (Art. XIV, Sec. 4 of the Constitution) (BV: We need the option of switching to a better school instead of putting up with the ridiculous religious classes of the sectarian schools like Ateneo and Lasalle. Allowing majority foreign equity into our private schools that meet local regulations should be allowed. It will force our local schools to innovate instead schoveling those decripit religion -laded globally-disconnected curriculum. We also need more schools that can provide lower costing technical certification (MCSE/ A+/CCNA/ etc) instead of the rip-off rates of local diploma mills and sectarian schools.)

21.  Culture, production, milling, processing, trading excepting retailing, of rice and corn and acquiring, by barter, purchase or otherwise, rice and corn and the by-products thereof (Sec. 5 of P.D. 194; Sec. 15 of R.A. 5762) 5

22.  Contracts for the supply of materials, goods and commodities to government-owned or controlled corporation, company, agency or municipal corporation (Sec. 1 of R.A. 5183) (BV: We need the option of allowing foreign-owned majority  companies to bid against the outrageous prices of local Filipino companies that habitually practice collusion.)

23.  Project Proponent and facility Operator of a BOT project requiring a public utilities franchise (Art. XII, Sec. 11 of the Constitution; Sec. 2a of R.A. 7718)

24.  Operation of deep sea commercial fishing vessels (Sec. 27 of R.A. 8550)

25.  Adjustment Companies (Sec. 323 of P.D. 612 as amended by P.D. 1814)

26.  Ownership of condominium units where the common areas in the condominium projects are co-owned by the owners of the separate units or owned by a corporation (Sec. 5 of R.A. 4726)

Up to Sixty Percent (60%) Foreign Equity

27.  Financing companies regulated by the Securities and Exchange Commission (Sec. 6 of R.A. 5980 as amended by R.A. 8556) 6

28.  Investment houses regulated by the SEC (Sec. 5 of P.D. 129 as amended by R.A. 8366) 6

 ***

You can go through each item in the Constitution and the FINL and read it with a critical mind with the intention of identifying protectionism and how it affects our daily lives.

One thing’s for sure – the Constitution needs to be amended because it’s not making things any better.

Noynoy can do something right – abandon the “walang mahirap kung walang corrupt yarn” – and embrace the truth – maraming naging corrupt dahil sa tindi ng paghihirap at dahil sa pagnanasang maging marangya tulad ng oligarkya.

Many have become corrupt due to severe economic needs. Further, they are following the lead of the oligarchy in this tale of grand corruption.

Noynoy can turn this around – but he has to bite the bullet. Exercise decisive leadership and amend the constitution.

Noynoy’s existential question is this – will I be a spokesman of the Oligarchy – or will I be the President of the Philippines?

From → Economy, Government

63 Comments
  1. dante permalink

    is it ok to murder all oligarchy and take their companies? nakakapikon na kasi!

  2. Excellent pointing out of how the Constitution keeps out foreign investors and keeps the country poor.

  3. NotMasochisticFilipino permalink

    You know what? We’ll have about 10 major disaster more as worse as Nagasaki and Hiroshima and we will still be stuck with this Constitution. The government is that stubborn.

    I’d really like to know their reason (or excuse) about upholding the Constitution to the bitter end (Aside from the fact that it does promote Monopoly of major businesses).

  4. dante permalink

    kakatakot pa dyan, noy supporters told me na constitution is very sacred and should not be looplessly change.

  5. Hyden Toro permalink

    This is one of the sticking point. Foreign investors will not come, if they will not make good profits of their investments. Russia’s Oil and Petroleum Industries are being developed by foreign investors. However, Primier Putin,is now putting some control restrictions. And, these changes of policies will surely scare foreign investors. Our Mining Industries are not yet fully developed.

    With being an Oligarchial Feudal government. I don’t think they will give a good look on the Philippines. Coupled with the problems of insurgencies. And, good brain power working as OFWs.

  6. John D. permalink

    I’m an American who visits the Philippines quite often with my Filipina/American girlfriend. She comes from a modest and hard working family. She’s been convincing me to start a business in the Philippines which is part of the reason why I am here at least three times a year, to observe and acclimate myself with the way of life and the system of business and politics in place. I can honestly say that after numerous visits and reading informative articles from this site, I will have to put the business idea on hold.

    (My girlfriend and I went to a mall and many stores have at least 15 business permits hanging on their wall. I could be wrong but the most you’ll find in America is probably 3 or 4.)

    As soon as the Philippine government or the constitution can find an effective fulcrum to balance globalization with Filipino nationalism, maybe a fair and progressive society can finally emerge. I don’t mean to sound insulting but perhaps your next constitutional convention should save its time and effort by simply using the current laws of the United States that has been around for over 200 years—seems to be working fine. Your lawmakers can download it from the internet and it’s free.

    Thanks to all your writers. That Larry King interview of Palin is a riot. My girlfriend filled me in. You guys should add part 3 to that series:

  7. Mike H permalink

    Creating jobs for Pinoys-in-Pinas can be easier in next 6 years than in prior 6 years. Reason??? China, that country is a-changing. Its labor costs are going up; laborers are more demanding.

    Where once low-tech factories and scant wages were welcomed in a China eager to escape isolation and poverty, workers are now demanding a bigger share of the profits. The government, meanwhile, is pushing foreign companies to make investments in areas it believes will create greater wealth for China, like high technology.

    Many companies are striving to stay profitable by shifting factories to cheaper areas farther inland or to other developing countries, and a few are even resuming production in the West.

    “China is going to go through a very dramatic period. The big companies are starting to exit. We all see the writing on the wall,” said Rick Goodwin, a China trade veteran of 22 years, whose company links foreign buyers with Chinese suppliers.

    ———————

    Noynoy has a great chance to bring factories and jobs into Pinas. Of course, he has to get onto airplanes and make visits to Australia, USA, UK , and he has to sell Pilipinas. Noynoy also has to bring down energy-costs for factories and businesses. These 2 things while he fights off competition from Thailand, Vietnam, Bangladesh, India, Taiwan, Egypt, Greece, Turkey… and, of course, China

  8. Mike H permalink

    Shoe😉 salesman…. karma. Maybe Noynoy really is THE CHOSEN ONE.:mrgreen:

  9. You can’t win by competing based on labor cost alone – the FDI is going to Vietnam – where foreigners are allowed to own land.

  10. palebluedot permalink

    …and this is why AP must be always part of my day. thanks BongV for this article. can i print this and slap it on the faces of the stupid idiotic priests i am dealing with right now? they are already starting to reorganize the against cha-cha movement (in the guise of good governance ministry) here and promote it to the becs with promises of heaven…*factsheet* to them!!!👿

  11. Joe America permalink

    Very superb dissection of the barriers to wealth. It is unfortunate that the Philippine elders correlate foreign with bad, but cannot look about and see the poverty caused by their own rule-bound governance. You have open markets and you have North Korea. It seems to me the Philippines is closer to North Korea in terms of paranoia and nit-picky rules aimed at exerting authority of any bozo with a desk. The nation is tied up in rules that typically work against the well-being of the nation.

    For example, Customs can either be a taxing agency or an agency that promotes safe, vibrant trade. It is a rule-bound, paper-bound, authority-mad nit-picking taxing agency working against the common good, a perfect example of the mindless exercise of authority where authority has become the main reason for being.

    Not productivity.

  12. I recalled one Noynoy interview. A reporter asked him if he becomes president would he travel overseas to seek investment. His answer “I not really fond of traveling”……I know then if he ever becomes president he will be a failure.
    It would have been a different story with Gordon. He has a strong desire to bring in more foreign investment to the country.

  13. Miriam Quiamco permalink

    “The Philippines was lumped along with Ethiopia and Thailand with an indicator score of 0 for several sectors.”

    Still the question that begs to be answered BongV, why is Thailand with the same restrictive climate on foreign investments as the Philippines advancing and we are lagging behind. In 2009 alone, Thailand enjoyed FDIs worth 10 billion dollars, higher than both Indonesia and the Philippines. FDIs will flow into Vietnam because of the proximity of the biggest market in Asia, China and also because there is no law and order problem there. Gibo was right, our law and order problems are keeping us underdeveloped , not to mention that the poverty-stricken provinces are all in Mindanao where lawlessness prevails. Unless we find a leader with guts to strengthen the state vis-a-vis other armed groups, we will not be able to attract FDIs.

  14. @Miriam – Infrastructure – http://www.adb.org/statistics/ics/pdf/PHI-Full-Report.pdf

    “The key findings from these three perspectives remain the same:

    (i) the Philippines has weak macroeconomic fundamentals that could impede investment and productivity growth; (BV:euphemism for constitution’s protectionist policies)

    (ii) the existing infrastructure is considered a serious constraint to doing business, especially the
    transportation and power sectors;

    (iii) corruption is perceived to be most serious concern of establishments; and

    (iv) business procedures and regulations need to be streamlined.

    Also, small enterprises tend to suffer more from these shortcomings than do mediumsize
    and large firms. On the basis of results of the regression analysis done in the study, firms
    engaged in international trade tend to perform better than those that are inward-oriented.
    Many companies fall short of their potential for exports and global integration. For
    businesses to thrive and become more competitive and outward-oriented, inadequacies
    in infrastructure, governance (over-regulation), and finance must be addressed with
    vigor and resolve.”

  15. It appears that the investment incentive system, which the Philippine governmenthas been trying to improve over time, does little to make up for deficiencies in theinvestment climate. Moreover, fiscal incentives are not costless, estimated in terms offoregone revenues (medium estimate) at PhP13 billion, representing about 30% ofcollected revenues from corporate income taxes in 2000 (Medalla 2002).

    Dissatisfaction with public works (roads) seems to be common in most countries,particularly in India (69%), Philippines (54%), and Bangladesh (49%). In the PRC andMalaysia, only around 20% perceived public works as a problem. Within the Philippines,among the various infrastructure services, public works also appear to be the mostunsatisfactory. The relatively poor state of roads in the Philippines is further shown bydata from the World Development Indicators (WDI 2003) on the proportion of roads thatis paved. Only 20% of the roads in the Philippines are paved versus Thailand’s 98%, SriLanka’s 95%, and Malaysia’s 76% (Figure 3.3). Only Bangladesh has a smallerproportion (10%) of paved roads. Clearly, poor roads and ports are a serious stumblingblock to doing business, making it difficult to access inputs, transport goods and reachmarkets in a timely manner

    During the early 1990s, the Philippines was beset by a major energy crisisprompting the government to take drastic measures to resolve the problem. Thereafter,electric power supply has become less problematic. The WBES 2000 survey data showthat only 14% of firms in the Philippines consider it a major issue, similar to thepercentages in the PRC and Indonesia and better than in Bangladesh, India andThailand (Figure 3.2). Nevertheless, Philippine firms face high energy costs comparedwith those in Indonesia, Malaysia and Thailand (Table 3.1)

    In terms of fixed line and mobile phonesubscribers, the Philippines with about 233 subscribers per 1,000 persons lags behindthe PRC, Malaysia, and Thailand (Figure 3.4). With 2.5 internet hosts per 10,000 population, the Philippines lags far behindMalaysia (29.3) and Thailand (10.5) (Figure 3.5). As regards access to personalcomputers, the Philippines remains markedly behind Malaysia but the gap vis-à-vis thePRC or Thailand is far less (Figure 3.6)

    In almost all aspects of the judiciary, the Philippines fares better than Indonesiabut worse than the PRC, Malaysia, and Thailand (Figure 3.15). Among the variousaspects, slowness of the wheels of the justice system appears to be the most glaringconcern for firms in the Philippines. About 87% of firms consider the judicial system asbeing slow in delivering action, compared with the PRC’s 58%, Malaysia’s 63%, andThailand’s 79%. Other features of the justice system in which the Philippines performspoorly, or where over 60% of the firms expressed dissatisfaction, are affordability,consistency, enforceability of decisions, and honesty. In terms of fairness andimpartiality, 56% of Philippine firms consider the judiciary as being weak. Though betterthan Indonesia, this is far worse than India and Thailand where less than one third offirms expressed such misgivings

    With respect to access to finance, the most problematic appears to be access toforeign banks, as expressed by about 34% of Philippine firms. Since the enactment ofRepublic Act 7721 or the Bank Liberalization Act in 1994, at least 10 foreign banks haveentered the country. However, foreign banks are said to be stricter in terms ofdocumentation compared to local banks, especially in terms of their transactions withdomestic corporations (Insolvency Asia n.d.).Given the difficulty of acquiring bank loans, over half of business financing isinternally generated in the Philippines (Figure 3.19). This proportion of financing is oneof the highest in Asian countries, surpassed only by the PRC at just below 60%. Indeed,internal funds appear to be the dominant source of finance in all the countriesconsidered. Only 21% of business financing in the Philippines is obtained through bankloans, compared with India and Thailand, both at about 30%. In the other countries, thepercentages are much lower

    casual observation suggests that transport infrastructure in the Philippines has laggedconsiderably behind those in Indonesia, Malaysia, and Thailand.

    http://www.adb.org/statistics/ics/pdf/PHI-Full-Report.pdf

  16. doreen permalink

    good article. i wonder if its ok to print these stuff here so that those who dont have internt access can read them . hehehe,

  17. Jay permalink

    some of my most fave topics that AP covers. Clearly the road to a prosperous and competitive economic future relies on redoing those Protectionist laws. It is the laws where the rich become richer and the poor are degraded to cows fit for annual slaughter.

  18. I am the type of person who looks at the stability of a company, also its viability to create investment for the long term. Do you want to invest your hard earned money…?

    You may consider these giants, and throw your hard earned cash, and buy a few, I mean a few[lots] of shares from these corporate [GIANTS].

    It’s time for you to do some research of your own. To pursue the future growth, with these corporations. Your decision, and the potential is there.

    It’s a damn great investment, with a great potential residual income, for the long term. This is just me talking.

    But first, you must fully understand how our Filipino culture in dealing with business practice, or its practices.

    Until the Philippines federally regulates for any foreign investor to establish their rights to conduct business in our nation, without any arbitrary conflicts of our governance systems. Our economics, is at a stalemate. 

    Below, as to BV have stated: 

    (BV: We need the option of allowing foreign-owned majority  companies to bid against the outrageous prices of local Filipino companies that habitually practice “collusion“.)

    I have highlighted the word “COLLUSION” this word alone is very passive in its own rights. Let me explain further bit more.

    • Collusion, is based on deception
    • It tries, and promotes deception
    • it encourages false pretense of deception
    • in other word, it is straight up DECEPTION

    Nice work BongV. 

  19. J_ag permalink

    My my a lot of b.s passing as fact here. The most restrictive FDI regime continues to be China and India. Yet they will be and will continue to be the drivers of growth for Asia and for development for their respective countries. Vietnam still practices a lease hold system of land ownership. They are following both the Japanese model and the Chinese model of restrictive capital accounts. However they are not as strict as the Chinese.

    Both on land and on capital accounts. Does the writer really know what macro-economic fundamentals of the country really mean?

    Interest rate setting, money supply and employment. (Macro economic fundamentals.)

    The country still the land of the ignorant and stupid.

    P.S. learn to distinguish from the financial markets from the physical markets.

    If the World Bank wants the free movement of capital then that should come with the free movement of goods and services and more importantly the free movement of labor.

    Free unrestricted movements of capital, trade and labor. Just like the U.S.A and the E.U.

    Do not talk nonsense.❓❓❓❓❓❓❓❓❓❓

  20. Our government must act now or else we will be forever left behind. After WWII, economically, we were second to Japan! We should have built high speed trains connecting Luzon and Mindanao by now!

    Our annual business permit registration requiring a lot of redundant papers and non-sense signatories (SSS,Philhealth, BIR Clearance,Fire Department, Electrical Dept, etc.) is laughable.

    In Germany, it takes (thirty) 30 minutes to get your Business Permit and the next time you will go to the City Hall is when you are going to close your business. Control mechanisms are issued and done by the respective government bodies and those who violate get sanctioned.

    The One Stop Shop Business Registration is not a successful approach. Long queues and the same tedious procedures packed in a small room or hall cannot be the best solution. Worst, suggestions and constructive criticisms are not welcome. Arrogant government employees are “untouchable” when it comes to their system.

  21. @j_ag – BS comment trying to pass of as fact😆

    Between your BS comment and an international panel whose facts have been vetted – learn to see the dysfunction of the fiscal policy and the investment policy – luma na si Bello tsong – LAOS NA😆

  22. Economic policy ought to be one that can be in-sync with the needs of the times – we cannot embed protectionism in the constitution without paying for it in terms of opportunity cost. The investor just goes elsewhere – we can’t argue with the numbers – we are getting crumbs in FDI.

  23. China does not allow foreigners to own land – BUT – it applies the same to its …. CITIZENS!😆

    The rights to buy property in India are reserved for certain groups that qualify, but for a foreign national is it illegal to own property unless they satisfy the residency requirement of 183 days in a financial year. Tourist visas last for 180 days, so it is also impossible to buy a property on a tourist visa.

    The groups of people who are allowed to buy in India without being residents of the country are known as NRIs and PIOs. NRIs are Non-Resident Indians, or those people who hold an Indian passport and nationality, but are not resident in the country. This includes those people who have emigrated from India to live in another country, but still wish to have an investment interest in their country.

    This allowance for the ownership of property for non-residents was extended to allow other people not resident in India, but of Indian descent up to four generations removed, to buy property in India. The PIO, or Person of Indian Origin, status has served to open up the property investment market to a huge number more foreign investors, which has been fuelling the current boom in property in India. In recent years, the government has introduced the Overseas Citizenship of India (OCI) scheme to allow a limited form of dual nationality to NRIs and PIOs. It is thought that the government plans to phase out PIO status in favour of OCI in years to come.

    – and in case you didn’t bother to read the study’s methodology before you opened your mouth, read the meaning of the word IGNORANT😆

  24. GabbyD permalink

    first, thanks for putting this up. this is indeed a good resource for thinking about changing the economic provisions in the constitution

    i wanna deal with land ownership, first, so as to be readable.

    1) the section deals with industrial land, not agri land.

    2) the IAB team is agnostic about the benefits of leasing and owning. FIRST, NOTHING in the report says owning is better. SECOND, the fact that they didnt aggregate (read: add) the lease-rights index and the ownership rights index testifies to this.

    3) East Asia and SEA is the least free of the regions when it comes to FDI regulations, but it attracts a significant amount of FDI REGARDLESS…

    4) about the rank of the Philippines…
    they provide a methodological note. see this: http://iab.worldbank.org/~/media/FPDKM/IAB/Documents/IAB-Methodology-note.ashx#page=24

    let me describe it. to arrive at the index [0-1], they have a survey of 14 questions (and 3 bonus questions), and they ADD the number of right (here, defined as more freedom) answers.

    the difference between the Philippines (68%) and Thailand (80) is based ONLY on a set of 4 questions which ALL deal with the following concept: leasing of public lands. [to check this, see the iab.worldbank.org website]

    this begs the question: are there expansive public lands for non-agri use in the philippines?

    honestly, i’m not sure. my sense is, it doesnt. but if any here have any info to the contrary, i’d listen.

  25. GabbyD permalink

    EDIT:

    the difference between the Philippines (68%) and Thailand (80)’score in “leasing of public lands” is based…

  26. boombox permalink

    Noy’s cabinet = Still Clueless about this issue….

    Oh I forgot.. they still have seminar regarding how to handle media… LOL..

  27. are there expansive public lands for non-agri use in the philippines? – if there’s none – score is ZERO?

  28. why “aren’t there expansive public lands for non-agri use in the philippines?” – back to the ➡ constitution

  29. J_ag permalink

    💡💡 Has the ignorant one ever tried to buy land in India or in China. Even the giant corporate personalities are not allowed to buy and are relegated to leasing properties in India. . Of yeah the NRI program for overseas Indians or of Indian ancestry provide investment incentives strictly for these NRI’s. You can get preferred yields tax free if you are of Indian ancestry. There is a distinct bias for those with Indian ancestry. That s blatant preferred status for Indians. Most of the Chinese equity and bond markets are restricted to Chinese nationals. That is blatant protectionism. I strongly suggest the writer of this post go to Bangalore, Mumbai and New Delhi. The preferred status for overseas Indians like in China has brought in massive Investments from overseas Indians and Chinese into their country.

    The Philippines the flow is in the reverse.

    That is Indians and or Chinese first policy. China and India together to open up their agricultural and industrial sectors and their financial sectors to foreign investors. They are at the forefront of the impasse of the Doha round. They refuse to get into the liberalization of the service sector (financial sector)

    That my dear ignorant friend is the macro-economic sector of setting interest rates and managing money supply.

    You want us to listen to the dogmatic presentation of the World bank who has been at the forefront of opening up the capital accounts sector of all countries. Sira ulo— the IMF is the vanguard of liberalization of the current accounts and the WB the capital accounts.

    These are the so called experts whose dogma has led to the greatest recession since the last one in 1929…

    Where have you been the last two years, under a rock?

    The common currency regime in Euroland is under stress and the dollar fiscal deficits in the U.S. portend a long term disaster waiting to happen and you expect the emerging countries to bail out the rich countries?

    That is pure stupidity.

    September 2008 is the 9/11 of financial globalization. The world has started on the road for the end of the dollar.

  30. J_ag permalink

    For the ignorant passing as knowledgeable from reading and pasting and posting.💡💡💡💡💡💡💡💡💡💡 N4DD
    There is major difference from theory and then practice. For people who have absolutely
    no practical experience in what they post it would be best to simply disclose their ignorance.

    Continuous residence is the key and all personal and corporate flows of capital are regulated by the Reserve Bank of India. There is the federal level of taxation and investment. Then there is the state level and then the city level.
    Legal issues

    “It is here that we come upon the stumbling block for the overseas property market in India – for most British buyers it is impossible to buy ‘immovable’ property in India. The FEMA (Foreign Exchange Management Act), 1999 governs the acquisition and transfer of property. It states that persons not resident of India and not of Indian origin cannot own property in India.”

    “The rights to buy property in India are reserved for certain groups that qualify, but for a foreign national is it illegal to own property unless they satisfy the residency requirement of 183 days in a financial year. Tourist visas last for 180 days, so it is also impossible to buy a property on a tourist visa.”

    “The groups of people who are allowed to buy in India without being residents of the country are known as NRIs and PIOs. NRIs are Non-Resident Indians, or those people who hold an Indian passport and nationality, but are not resident in the country. This includes those people who have emigrated from India to live in another country, but still wish to have an investment interest in their country.”

    “This allowance for the ownership of property for non-residents was extended to allow other people not resident in India, but of Indian descent up to four generations removed, to buy property in India. The PIO, or Person of Indian Origin, status has served to open up the property investment market to a huge number more foreign investors, which has been fuelling the current boom in property in India. In recent years, the government has introduced the Overseas Citizenship of India (OCI) scheme to allow a limited form of dual nationality to NRIs and PIOs. It is thought that the government plans to phase out PIO status in favour of OCI in years to come.”

    http://www.buyassociation.co.uk/property/text/india/buyassociation/buying-a-property-in-india/?s=1278819415&k=e67a0457634f07993e148a2e7ecf1bb3

  31. J_ag permalink

    For those who would like to get knowledgeable information do not go to the web sites of the IMF or WB.

    http://business.rediff.com/report/2006/aug/21/land.htm

    More practical information on buying land in India from practitioners and not the ignorant.

    The boys of the IMF-WB would like to end around the Doha stalled round on the liberalization of the services sector. The Philippines has already fully liberalized the physical sector of the Philippine economy. Still kulelat pa rin.

    In India what appears open is actually closed to foreigners. Both China and India already told the IMF-WB and the G-20 that at their stage of societal development they would continually refuse to open up their service sector to globalization. Most especially their financial sector. It is a matter of maintaining sovereignty on macro economic policy formulation and implementation. (Interest rate setting and managing money supply to encourage investment & employment.)

    Where did the ignorant one learn his economics? Does he know the workings of a market economy that is managed by the price of money.

    Money and the price of money (credit creation) is a purely national enterprise unless a country has given it up.❓❓❓❓❓

  32. GabbyD permalink

    what u said is consistent with the iab report.

  33. you are all resorting to red herring arguments – the long and short of it is this “does India’s constitution disallow foreigners to own land like the Philippines” – all those keyboard strokes for naught😆

  34. you can copy but can you read? Continuous residence is the key and all personal and corporate flows of capital are regulated by the Reserve Bank of India. There is the federal level of taxation and investment. Then there is the state level and then the city level.
    Legal issues
    – you see the forest but not the trees. can the philippine. Write a novel as long as war and peace justifying all the newest theories – the fact is THE CONSTITUTION PROHIBITS foreigners from owning land – much less 100% foreign equity (with very limited exclusions). J_ag make some more bagoong – provide us with more red herrings.😆😆😆

  35. More red herrings – the point is does the Constitution of the Philippines allow foreigners to own land like other countries. The answer is NO.😆😆😆

  36. J_ag, Bello – and the ragtag bands of leftist economists are still stuck on the fiscal policy as a driver of growth. Sure tarriff affects TRADE. As shown in J_ag’s tirade above – which is full of red herrings – while he browbeats around about fiscal issues – he can’t QUESTION THE FACT – The Philippine constitution does not allow foreigners to own land.

    Couple a protectionist fiscal policy – as what Bello and J_ag want – and couple it with protectionist investment policy – Bello and J_ag will develop the Philippines like North Korea😆😆😆

    India will protect its services – sure, so will the Philippines – but if those services require ownership of land – Philippines LOSES. WHY? It’s the constitution STUPID!😆

    Then the Philippines offers “incentives” – foregone revenue for public services – to get investors to locate in the Philippines. Do the math – those incentives will be eaten up by corruption – figuring out how to gain control over the company and own property without violating the constitution.

    The constitution promotes corruption😆😆

    Then they wonder why there’s corruption – yung libro nyo amoy al campor😆😆😆

  37. From the Reserve Bank of India – not J_ag’s fly by night URL: 😆😆😆

    Acquisition and Transfer of Immovable Property in India by a person resident outside India
    Frequently Asked Questions (FAQs)

    Acquisition and Transfer of Immovable Property in India by a Person Resident outside India

    Acquiring immovable property in India by persons resident outside India is regulated in terms of Section 6(3) (i) of the Foreign Exchange Management Act (FEMA), 1999 as well as by the regulations contained in Notification issued by RBI viz Notification No FEMA. 21/2000-RB dated May 3, 2000, as amended from time to time. The persons resident outside India are categorized as Non- Resident Indians (NRIs) or a foreign national of Indian Origin (PIO) or a foreign national of non-Indian origin. A person resident in India who is not a citizen of India is also covered by the relevant Notifications.

    2. Statutorily, under the provisions of Section 6(5) of FEMA 1999, a person resident outside India can hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if such currency, security or property was acquired, held or owned by such person when he was a resident in India or inherited from a person who was a resident in India.

    3. The regulations under the Notification No FEMA 21 dated May 3, 2000 permit a NRI or a PIO to acquire immovable property in India other than agricultural land or, plantation property or farm house. Further, foreign companies who have been permitted to open an office in India are also allowed to acquire any immovable property in India, which is necessary for or incidental to carrying on such activity. This stipulation is not available to entities which are permitted to open liaison offices in India.

    4. The relevant regulations covering the transactions in immovable property have been notified vide RBI Notification No.FEMA 21/2000-RB dated May 3, 2000 and this basic notification has been subsequently amended by the notifications detailed below:

    1. Notification No.FEMA 64/2002-RB dated June 29, 2002;
    2. Notification No.FEMA 65/2002-RB dated June 29, 2002;
    3. Notification No.FEMA 93/2003-RB dated June 9, 2003; and
    4. Notification No. FEMA 146/2006-RB dated February 10 2006 (available with A.P.(DIR Series) Circular No. 5 dated 16.8.2006 on website)
    All the above notifications are available on RBI website: http://www.fema.rbi.org.in.

    5. The restrictions on acquiring immovable property in India by a person resident outside India would not apply where the immovable property is proposed to be acquired by way of a lease for a period not exceeding 5 years or where a person is deemed to be resident in India. In order to be deemed to be a person resident in India, from FEMA angle, the person would need to comply with the criterion for residency as defined in Section 2(v) of FEMA 1999. However, citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan cannot acquire or transfer immovable property in India, (other than on lease, not exceeding five years) without prior permission of the Reserve Bank.

    6. NRIs/PIO are allowed to repatriate an amount up to USD one million, per financial year (April-March), out of the balances held in the NRO account subject to tax compliance. This amount includes sale proceeds of assets acquired by way of inheritance or settlement.

    7. While the statutory and regulatory provisions are indicated above, we have been receiving several queries from individuals on operational procedures regarding acquisition, holding and transferring of immovable property in India and repatriating/remitting the proceeds arising from sale of such property. In order to clarify these issues, we have attempted a set of FAQs on various issues relating to acquisition and transfer of immovable property in India by a person resident outside India and a person resident in India who is not a citizen of India.

    In case there are other issues to be resolved, a reference may be made to the

    Chief General Manager-in-Charge,
    Foreign Exchange Department
    Foreign Investment Division,
    Reserve Bank of India,
    Central Office
    Mumbai- 400 001.

    The FAQs cover the following topics:

    (I) Acquisition of immovable property in India by a person resident outside India

    i.e. by a NRI / PIO / foreign national of non-Indian origin through –

    i) purchase
    ii) gift
    iii) inheritance

    (II) Transfer of immovable property in India by a person resident outside India by –

    i) sale
    ii) gift
    iii) mortgage

    (III) Mode of payment for purchase of property in India.

    (IV) Repatriation of sale proceeds of property

    i) purchased
    ii) received as gift
    iii) inherited

    (V) Provisions for Foreign Embassies / Diplomats / Consulate Generals.

    (VI) Other issues.

    I Acquisition of Immovable Property in India

    Q.1 Who can purchase immovable property in India?

    A.1 Under the general permission available, the following categories can freely purchase immovable property in India:
    i) Non-Resident Indian (NRI)- that is a citizen of India resident outside India
    ii) Person of Indian Origin (PIO)- that is an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who

    1. at any time, held Indian passport, or
    2. who or either of whose father or grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).
    The general permission, however, covers only purchase of residential and commercial property and not for purchase of agricultural land / plantation property / farm house in India.

    Q.2. Whether NRI/PIO can acquire agricultural land/ plantation property / farm house in India?

    A.2. No. Since general permission is not available to NRI/PIO to acquire agricultural land/ plantation property / farm house in India, such proposals will require specific approval of Reserve Bank and the proposals are considered in consultation with the Government of India.

    Q.3. Do any documents need to be filed with Reserve Bank of India after purchase?

    A.3. No. An NRI / PIO who has purchased residential / commercial property under general permission, is not required to file any documents with the Reserve Bank.

    Q.4. How many residential / commercial properties can NRI / PIO purchase under the general permission?

    A.4. There are no restrictions on the number of residential / commercial properties that can be purchased.

    Q.5. Can a foreign national of non-Indian origin be a second holder to immovable property purchased by NRI / PIO?

    A.5. No.

    Q.6. Can a foreign national of non-Indian origin resident outside India purchase immovable property in India?

    A.6. No. A foreign national of non-Indian origin, resident outside India cannot purchase any immovable property in India. But, he/she may take residential accommodation on lease provided the period of lease does not exceed five years. In such cases, there is no requirement of taking any permission of or reporting to Reserve Bank

    Q.7 Can a foreign national who is a person resident in India purchase immovable property in India?

    A.7. Yes, but the person concerned would have to obtain the approvals, and fulfil the requirements if any, prescribed by other authorities, such as the concerned State Government, etc However, a foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of Reserve Bank. Such requests are considered by Reserve Bank in consultation with the Government of India.

    Q.8 Can an office of a foreign company purchase immovable property in India?

    A.8. A foreign company which has established a Branch Office or other place of business in India, in accordance with FERA / FEMA regulations, can acquire any immovable property in India, which is necessary for or incidental to carrying on such activity. The payment for acquiring such a property should be made by way of foreign inward remittance through proper banking channel. A declaration in form IPI should be filed with Reserve Bank within ninety days from the date of acquiring the property. Such a property can also be mortgaged with an Authorised Dealer as a security for other borrowings. On winding up of the business, the sale proceeds of such property can be repatriated only with the prior approval of Reserve Bank. Further, acquisition of immovable property by entities who had set up Branch Offices in India and incorporated in Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of Reserve Bank to acquire such immovable property. However, if the foreign company has established a Liaison Office, it can not acquire immovable property . In such cases, Liaison Offices, can take property by way of lease not exceeding 5 years.

    Q.9 Whether immovable property in India can be acquired by way of gift ?

    A.9. (a) Yes, NRIs and PIOs can freely acquire immovable property by way of gift either from

    i) a person resident in India or
    ii) an NRI or
    iii) a PIO.

    However, the property can only be commercial or residential. Agricultural land / plantation property / farm house in India cannot be acquired by way of gift.
    (b) A foreign national of non-Indian origin resident outside India cannot acquire any immovable property in India through gift.

    Q.10. Whether a non-resident can inherit immovable property in India?

    A.10. Yes, a person resident outside India i.e.

    i) an NRI
    ii) a PIO and
    iii) a foreign national of non-Indian origin can inherit and hold immovable property in India from a person who was resident in India. However, a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan should seek specific approval of Reserve Bank.

    Q.11. From whom can the non-resident inherit immovable property?

    A.11. A person resident outside India (i.e. NRI or PIO or foreign national of non-Indian origin) can inherit immovable property from

    (a) a person resident in India.
    (b) a person resident outside India

    However, the person from whom the property is inherited should have acquired the same in accordance with the foreign exchange regulations applicable at that point of time.

    II. Transfer of immovable property in India
    (i) Transfer by Sale

    Q.12 Can an NRI/ PIO/foreign national sell his residential / commercial property?

    A.12. (a) NRI can sell property in India to-

    i) a person resident in India or
    ii) an NRI or
    iii) a PIO.

    (b) PIO can sell property in India to

    i) a person resident in India.
    ii) an NRI or
    iii) a PIO – with the prior approval of Reserve Bank

    (c ) Foreign national of non-Indian origin including a citizen of Pakistan or Bangaladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan can sell property in India with prior approval of Reserve Bank to

    i) a person resident in India
    ii) an NRI
    iii) a PIO

    Q.13. Can an agricultural land / plantation property / farm house in India owned / held by a non-resident be sold?

    A.13. (a) NRI / PIO may sell agricultural land /plantation property/farm house to a person resident in India who is a citizen of India.
    (b) Foreign national of non-Indian origin resident outside India would need prior approval of Reserve Bank to sell agricultural land/plantation property/ farm house in India

    (ii) Transfer by gift

    Q.14. Can a non-resident gift his residential / commercial property?

    A.14. Yes.
    (a) NRI / PIO may gift residential / commercial property to –

    (i) person resident in India or
    (ii) an NRI or
    (iii) PIO.
    (b) foreign national of non-Indian origin needs prior approval of Reserve Bank.

    Q.15. Can an NRI / PIO / Foreign national holding an agricultural land / plantation property / farm house in India gift the same?

    A.15. (a) NRI / PIO can gift but only to a person resident in India who is a citizen of India.
    (b) foreign national of non-Indian origin needs prior approval of Reserve Bank

    (iii) Transfer through mortgage
    Q.16. Can residential / commercial property be mortgaged?

    A.16. i) NRI / PIO can mortgage to:

    (a) an authorised dealer / housing finance institution in India –
    without the approval of Reserve Bank.
    (b) a party abroad – with prior approval of Reserve Bank.

    ii) a foreign national of non-Indian origin can mortgage only with prior approval of Reserve Bank
    iii) a foreign company which has established a Branch Office or other place of business in accordance with FERA/FEMA regulations has general permission to mortgage the property with an authorized dealer in India.

    III. Mode of payment for purchase

    Q.17. How can an NRI / PIO make payment for purchase of residential / commercial property in India ?

    A.17. Payment can be made by NRI / PIO out of
    (a) funds remitted to India through normal banking channel or
    (b) funds held in NRE / FCNR (B) / NRO account maintained in India
    No payment can be made either by traveller’s cheque or by foreign currency notes.
    No payment can be made outside India.

    Q.18 What shall be the option if there is refund of application money / payment made by the building agencies / seller because of non-allotment of flat / plot / cancellation of bookings / contracts ?

    A.18. The amount of refund, together with interest (net of income tax) can be credited to NRE account. This is subject to condition that the original payment was made by way of inward remittance or by debit to NRE / FCNR (B) account. (Please refer to A.P. (DIR) Series Circular No. 46 dated 12.11.2002)

    Q.19. Can NRI / PIO avail of loan from an authorised dealer for acquiring flat / house in India for his own residential use against the security of funds held in his NRE Fixed Deposit account / FCNR (B) account?

    A.19. Yes, such loans are subject to the terms and conditions as laid down in Schedules 1 and 2 to Notification No. FEMA 5/2000-RB dated May 3, 2000 as amended from time to time. However, banks cannot grant fresh loans or renew existing loans in excess of Rupees 20 lakh against NRE and FCNR(B) deposits either to the depositors or to third parties [cf. A.P. (DIR Series) Circular No. 29 dated January 31, 2007].

    Such loans can be repaid

    (a) by way of inward remittance through normal banking channel or
    (b) by debit to his NRE / FCNR (B) / NRO account or
    (c) out of rental income from such property.
    (d) by the borrower’s close relatives, as defined in section 6 of the Companies Act, 1956, through their account in India by crediting the borrower’s loan account.

    Repatriation:

    (a). In case the amount has been received from inward remittance or debit to NRE/FCNR(B)/NRO account for acquiring the property or for repayment of the loan, the principal amount can be repatriated outside India.
    For this purpose, repatriation outside India means the buying or drawing of foreign exchange from an authorised dealer in India and remitting it outside India through normal banking channels or crediting it to an account denominated in foreign currency or to an account in Indian currency maintained with an authorised dealer from which it can be converted in foreign currency

    (b) in case the property is acquired out of Rupee resources and/or the loan is repaid by close relatives in India ( as defined in Section 6 of the Companies Act, 1956), the amount can be credited to the NRO account of the NRI/PIO. The amount of capital gains, if any, arising out of sale of the property can also be credited to the NRO account.
    NRI/PIO are also allowed by the Authorised Dealers to repatriate an amount up to USD 1 million per financial year out of the balance in the NRO account for all bonafide purposes to the satisfaction of the authorised dealers, subject to tax compliance.

    Q.20. Can NRI / PIO, avail of housing loan in rupees from an authorised dealer or housing finance institution in India approved by the National Housing Bank for purchase of residential accommodation or for the purpose of repairs / renovation / improvement of residential accommodation ? How can such loan be repaid?

    A.20. Yes, NRI/PIO can avail of housing loan in rupees from an Authorised Dealer or housing finance institution subject to certain terms and conditions. (Please refer to Regulation 8 of Notification No. FEMA 4/2000-RB dated 3.5.2000 and A.P. (DIR) Series Circular No. 95 dated April 26, 2003).
    Such a loan can be repaid

    (a) by way of inward remittance through normal banking channel or
    (b) by debit to his NRE / FCNR (B) / NRO account or
    (c) out of rental income from such property.
    (d) by the borrower’s close relatives, as defined in section 6 of the Companies Act, 1956, through their account in India by crediting the borrower’s loan account.

    Q.21. Can NRI/PIO avail of housing loan in rupees from his employer in India?

    A.21. Yes, subject to certain terms and conditions (Please refer to Regulation 8A of Notification No. FEMA 4/2000-RB dated May 3, 2000 and A.P. (DIR Series) Circular No.27 dated October 10, 2003).

    IV Repatriation of sale proceeds of residential / commercial property purchased by NRI / PIO

    Q.22. Can NRI / PIO repatriate the sale proceeds of immovable property? If so, what are the terms?

    A.22. NRI / PIO may repatriate the sale proceeds of immovable property in India

    (a) If the property was acquired out of foreign exchange sources i.e. remitted through normal banking channels / by debit to NRE / FCNR (B) account
    The amount to be repatriated should not exceed the amount paid for the property:

    1. in foreign exchange received through normal banking channel or
    2. by debit to NRE account(foreign currency equivalent, as on the date of payment) or debit to FCNR (B) account.
    Repatriation of sale proceeds of residential property purchased by NRI / PIO out of foreign exchange is restricted to not more than two such properties.
    Capital gains, if any, may be credited to the NRO account from where the NRI/PIO may repatriate an amount up to USD one million, per financial year, as discussed below.

    (b) If the property was acquired out of Rupee sources, NRI or PIO may remit an amount up to USD one million, per financial year, out of the balances held in the NRO account (inclusive of sale proceeds of assets acquired by way of inheritance or settlement), for all the bonafide purposes to the satisfaction of the Authorized Dealer bank and subject to tax compliance.

    Q.23. Can an NRI/PIO repatriate the proceeds in case the sale proceed was deposited in NRO account?

    A.23. From the NRO account, NRI/PIO may repatriate up to USD one million per financial year (April-March), which would also include the sale proceeds of immovable property.

    Q.24. If a Rupee loan was taken by NRI/PIO from Authorised Dealer or housing finance institution for purchase of residential property can an NRI / PIO repatriate the sale proceeds of such property?

    A.24. Yes, provided the loan has been subsequently repaid by remitting funds from abroad or by debit to NRE/FCNR(B) accounts (Please see A.P. (DIR) Series Circular No. 101 dated 5.5.2003)

    Q.25. If the property was purchased from foreign inward remittance or from NRE / FCNR (B) account, can the sale proceeds of property be repatriated immediately?

    A.25. Yes.

    Q.26. Is there any restriction on number of residential properties in respect of which sale proceeds can be repatriated by NRI / PIO?

    A.26. Yes, sale proceeds of not more than two residential properties can be repatriated.

    Q.27. If the immovable property was acquired by way of gift by the NRI/PIO, can he repatriate abroad the funds from sale?

    A.27. The sale proceeds of immovable property acquired by way of gift should be credited to NRO account only. From the balance in the NRO account, NRI/PIO may remit up to USD one million, per financial year, subject to the satisfaction of Authorised Dealer and payment of applicable taxes.

    Q.28 If the immovable property was received as inheritance by the NRI/PIO can he repatriate the sale proceeds?

    A.28. Yes, general permission is available to the NRIs/PIO to repatriate the sale proceeds of the immovable property inherited from a person resident in India. NRIs/PIO may repatriate an amount not exceeding USD one million, per financial year, on production of documentary evidence in support of acquisition / inheritance of assets, an undertaking by the remitter and certificate by a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes vide their Circular No.10/2002 dated October 9, 2002. [cf. A. P. (DIR Series) Circular No.56 dated November 26, 2002].
    In case of a foreign national, sale proceeds can also be repatriated even if the property is inherited from a person resident outside India. But this is allowed only with prior approval of Reserve Bank. The foreign national has to approach Reserve Bank with documentary evidence in support of inheritance of the immovable property and the undertaking and the C.A. Certificate as mentioned above.
    The general permission for repatriation of sale proceeds of immovable property is not available to a citizen of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan and Iran and he has to seek specific approval of Reserve Bank.
    As FEMA specifically permits transactions only in Indian Rupees with citizens of Nepal and Bhutan, the question of repatriation of the sale proceeds in foreign exchange to Nepal and Bhutan would not arise.

    V. Provisions for Foreign Embassies / Diplomats / Consulate Generals

    Q.29. Can Foreign Embassies / Diplomats / Consulate General purchase / sell immovable property in India ?
    A.29. Yes, Foreign Embassies / Diplomats / Consulate Generals can purchase and sell any immovable property other than agricultural land / plantation property / farm house in India with prior clearance from the Government of India, Ministry of External Affairs. The payment should be made by foreign inward remittance through normal banking channel.

    VI. Other issues

    Q.30. Can NRI / PIO rent out the residential / commercial property purchased out of foreign exchange / rupee funds?

    A.30. Yes, NRI/PIO can rent out the property without the approval of the Reserve Bank. Rent received can be credited to NRO / NRE account or remitted abroad. Powers have been delegated to the Authorised Dealers to allow repatriation of current income like rent, dividend, pension, interest, etc. of NRIs/PIO who do not maintain an NRO account in India based on an appropriate certification by a Chartered Accountant, certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid/provided for.[cf. A.P. (DIR Series) Circular No. 45 dated May 14, 2002].

    Q.31. Can a person who had bought immovable property when he was a resident, continue to hold such property even after becoming an NRI/PIO?

    A. 31. Yes, he can continue to hold the residential / commercial property / agricultural land/ plantation property / farm house in India without the approval of the Reserve Bank.

    Q. 32. In which account can the sale proceeds of such immovable property be credited ?

    A.32. The sale proceeds may be credited to NRO account.

    Q.33. Can the sale proceeds of the immovable property referred to in Q.No. 31 be remitted abroad ?

    A.33. Yes, provided the amount to be remitted does not exceed USD one million per financial year, for all bonafide purposes to the satisfaction of Authorised Dealers and subject to tax compliance.

    Q.34. Can foreign nationals of non-Indian origin resident in India or outside India who had earlier acquired immovable property under FERA with specific approval of Reserve Bank continue to hold the same? Can they transfer such property?

    A.34. Yes, they may continue to hold the immovable property. However, they can transfer the property only with the prior approval of Reserve Bank.

    Q.35. Is a resident in India governed by the provisions of Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulations, 2000?

    A.35. A person resident in India who is a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan is governed by the provisions of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000 ie. he would require prior approval of Reserve Bank for acquisition and transfer of immovable property in India even though he is resident in India. Such requests are considered by Reserve Bank in consultation with the Government in India

    Definitions
    Q.36.Where are the terms a `person resident in India’ and a `person resident outside India’ defined ?

    A.36. Section 2 (v) and Section 2(w) of the FEMA, 1999 defines `person resident in India’ and a `person resident outside India’ respectively.

    Q.37. What is meant by a person resident in India ?

    A.37. Under FEMA, a person resident in India is defined as a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year (April-March) and who has come to or stays in India either for taking up employment, carrying on business or vocation in India or for any other purpose, that would indicate his intention to stay in India for an uncertain period. In other words, to be treated as `a person resident in India’ under FEMA, a person has not only to satisfy the condition of the period of stay (being more than 182 days during the course of the preceding financial year) but has also to comply with the condition of the purpose / intention of stay.

    Q.38. What is meant by a person resident outside India ?

    A.38. The Act defines a ‘a person resident outside India’ as a person who is not a person resident in India’ (As defined in Q.No. 37 above)

    Q.39. Who can determine whether a person is resident in India or not?

    A.39. Reserve Bank does not determine the residential status. Under FEMA, residential status is determined by operation of law. The onus is on an individual to prove his / her residential status, if questioned by any authority.

    Q.40. If a foreign national is a person resident in India as per the provisions of Section 2(v) (i)B of the FEMA, 1999, does he require approval of Reserve Bank to purchase any immovable property in India ?

    A.40 A foreign national resident in India does not require approval from Reserve Bank from FEMA angle, but approvals if any required in terms of regulations prescribed by other authorities such as the concerned State Government etc. will have to be obtained by him / her. However, a foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan requires specific prior approval of Reserve Bank.

    Who’s IGNORANT Now?😆😆😆

  38. J_ag,
    What’s your beef with international organizations or liberalization the way we see it? You’ve got the traits of an anti-foreignist nutcase. Get over it.

  39. J_ag,
    You seem to have an anti-WB, IMF or anti-foreignist biased. Your posts are so colored with it. Get off it, buddy, it’s clouding your better judgment. If India and China are so FDI-restrictive, why are they still getting more foreign investments than we are? And they still have a lot of corruption too. The Constitution is keeping us poor. We’re trying to relate cause to effect here, while you’re relating effect to non-cause.

  40. Nice article! Removing foreign restrictions was the original purpose of FVR’s charter change but Cory and her minions thought that their interests (elites) are under threat so they claimed that the charter change was to extend FVR’s term to scare the people off.. so I doubt Mama’s boy Abnoy will want to change his mother’s constitution.. even though, he can’t understand every single word in it…

  41. This in many ways, that our Philippines Government[Oligarchy] can be more insidious and worse than being an outright socialist.

    “Excuse me. Let me further explain.”

    Socialism is a system where the Philippines government[oligarchies] directly owns and manages businesses. Corporatism is a system where businesses are nominally in private hands, (this is the catch phrase words “private hands“) but are in fact controlled by the [Trapos]government. In a corporatist state, [trapos]government[oligarchy] officials often act in collusion with their favored business interests to design polices that give those interests a monopoly position, to the detriment of both competitors and consumers.

    Yes, a great example of this Socialism and Corporatism is Manny Villar and many others…[…]   

    Geezzz…, how I hate this word “COLLUSION” and how our Filipino government are so entrench with the systems it promotes to our own people, not alone, our nation. Very degrading to our Filipino communities, if I may so.

    The way things are going with the Aquino’s administration, in less than two weeks, looks like, or maybe seems like, the Trapos are back at it again.

    Wake up, Pinoy-in-Pinas.

  42. palahubug99 permalink

    To implement changes in the protectionist 1987 constitution, you would need a majority vote in the oligarchy-dominated batasan which is why I don’t think this will ever happen. The ruling elite families prefer the way things are now. Why change? They’ve got it made for generations to come.

  43. boombox permalink

    Noynoy = “Dunno” boy…

  44. poipoi permalink

    this country is dying slowly! but it will be a blast of failure now with noynoy!

    -erap
    -gloria
    – (and now) noynoy
    OMG!

  45. J_ag permalink

    Wow now the ignorant one says that one can separte fiscal policy from monetary policy… Fiscal and monetary policy are two sides of one coin.. This must be hard for weak brains to understand…

    Fiscal policy is taxation of all forms. The fiat currency is the medium for one to pay taxes to the state. Otherwise people would bring rice or goods to pay their taxes. Kings used to just that. Currency created by state law.

    Who sets the short term price for credit? The state…

    No need to burden the ignorant one with the fractional reserve system… and the functions of the Treasury Department…

  46. J_ag permalink

    “The rules of the game has chnged gloablly too. The Washington Consensus policies and the undelying ideology of market fundamentalism are dead. In the past, there might have been a debate over whether
    there was a level playing field between developed and less developed countries; now there can be no debate. The poor coountires simply can’t back up their enterprises in the way that rich do, and this alters the risks that they can undertake. They have seen the risks of glablization badly managed. But the hoped for reforms in how globalization is managed still seem on the distant horizon.” Joseph Stiglitz, Free fall..

    Now even Stiglitz will be branded as leftie for calling for a review of the IMF-WB-U.S. Treasury misgovernment of the world economy. In case of fire call them commies…..

    Who elected them anyway????

    As for the ignorant one :On foreigners of non Indian extraction read between the lines for the qualifier.

    There is a big difference between theory and practice for the ignorant.

    Q.7 Can a foreign national who is a person resident in India purchase immovable property in India?

    A.7. Yes, but the person concerned would have to obtain the approvals, and fulfil the requirements if any, prescribed by other authorities, such as the concerned State Government, etc However, a foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of Reserve Bank. Such requests are considered by Reserve Bank in consultation with the Government of India.

    Q.8 Can an office of a foreign company purchase immovable property in India?

    A.8. A foreign company which has established a Branch Office or other place of business in India, in accordance with FERA / FEMA regulations, can acquire any immovable property in India, which is necessary for or incidental to carrying on such activity. The payment for acquiring such a property should be made by way of foreign inward remittance through proper banking channel. A declaration in form IPI should be filed with Reserve Bank within ninety days from the date of acquiring the property. Such a property can also be mortgaged with an Authorised Dealer as a security for other borrowings. On winding up of the business, the sale proceeds of such property can be repatriated only with the prior approval of Reserve Bank. Further, acquisition of immovable property by entities who had set up Branch Offices in India and incorporated in Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of Reserve Bank to acquire such immovable property. However, if the foreign company has established a Liaison Office, it can not acquire immovable property . In such cases, Liaison Offices, can take property by way of lease not exceeding 5 years.

  47. yup you speak again – and every time you speak your ignorance shows up with more red herrings. I said – you cannot separate the fiscal policy FROM INVESTMENT POLICY not monetary policy. You can’t even read correctly. Ano ba ‘tong mga FV puro red herring. Sa sinulat na isang libo, walang tama😆

  48. The ignorant one, J_ag has to insist in his deluded reality – sorry kiddo, your argument is LAME – another red herring argument.

    Stick to the BASICS – does the constitution of said countries have something similar to the Philippine constitution’s protectionist policy – the answer is NO. Keep coming up with more red herring J_ag. Here’s the reality – I have worked as investment promotion officer – and a lot of the prospective investors I interviewed where turned off by the protectionist FDI policy – read INVESTMENT – not monetary.. not FISCAL… INVESTMENT.. – between your “link” that you read – and my experience – in work, reality of promoting investments – and actually hearing investor says it.. many times over – I say – your sophomoric amateurish URL does not hold any water😆

    Consider this – a retired expat wants to invest in a local telecomm exchange – he doesn’t need to know fiscal policy for that. All he needs to know is whether he can own his company 100% or not – and the land on which he will build the complex. J_ag obviously, you are an academic, a pencil-pusher who has never done business at all – puro drawing😆

    J_ag’s little knowledge is dangerous – just like Noynoy’s wangwang😆

  49. J_ag – it’s one thing to read Stiglitz. it’s another thing to understand what he is writing. Stiglitz is only one piece of the puzzle.

    This is Stiglitz argument:

    “Making Globalization Work (2006) surveys the inequities of the global economy, and the mechanisms by which developed countries exert an excessive influence over developing nations. Dr. Stiglitz argues that through tariffs, subsidies, an over-complex patent system and pollution, the world is being both economically and politically destabilised. Stiglitz argues that strong, transparent institutions are needed to address these problems. He shows how an examination of incomplete markets can make corrective government policies desirable.

    Stiglitz argues that economic opportunities are not widely enough available, that financial crises are too costly and too frequent, and that the rich countries have done too little to address these problems. Making Globalization Work[33] had sold more than two million copies.”

    The answer to his argument lies in Michael Porter’s “Competitive Advantage of Nations”😆

    “A nation’s prosperity depends on its competitiveness, which is based on the productivity with which it produces goods and services. Sound macroeconomic policies and stable political and legal institutions are necessary but not sufficient conditions to ensure a prosperous economy. Competitiveness is rooted in a nation’s microeconomic fundamentals—the sophistication of company operations and strategies and the quality of the microeconomic business environment in which companies compete. An understanding of the microeconomic foundations of competitiveness is fundamental to national economic policy.”

    Case in point Singapore – it was NOTHING In the 50s but now has a standard of living higher than a lot of Western countries.

    Singapore, HK, Taiwan, SK competes and innovates – the Philippines protects, stagnates, and plays the victim-card.

    You can kiss your victim mentality till kingdom come. While watching Singapore, HK, Taiwan, SK – kick your protectionist Filipino ass😆

  50. GabbyD permalink

    my point is this: if there arent expansive public non-agri lands, whether or not RP allows the lease of public lands is immaterial.

  51. I don’t know why the hell are Filipinos so angry at foreigners, consider them enemies and want to keep them out, when the real enemies are the ones they voted to office!👿👿👿😐

  52. The point is this – the Philippines is competing with other countries for FDI. Other countries have what investors are looking for – the Philippines doesn’t.😆

    You see the Philippines tries to impress upon investors that business should be done – Philippine-style. Helloooooo… beggars for FDI can’t be choosers. you want FDI – you abide by how the game is played. if you don’t, then you become a wallflower, it’ simple really😆

  53. ulong pare permalink

    … daang

    … am having a flashback reading all that stuff… i thought i was still with ms prokopio, eco 101 and not paying attention to all that gooblygook…:mrgreen:

    … picture this: my hood used to be inhabited with pure flips… then, dang foreigners started buying the area, improved on it, built mansions, roads, infrastructures, etc… put gates and posted flip sekyus at the gates…

    … as a jealous patr-IYOT-ic – nationalistic flip myself, i did the same… now, dang foreigners and i are on equal footing…… and, I LIKE IT…:mrgreen:

    … if y’all don’t have milliones dollares in your kotong bank, DO NOT DREAM, EVEN LOOK at settling in my ‘hood…

    … now, we call the “pure flips” as natives… nagkalat doon sa kanto…😳

  54. Zadkiel permalink

    I was planning to create thread in a pinoy forum to have discussion about an idea of what if we have a federal version of economy. I searched for Economic Federalism but it seems its not an official term. What I mean is that a region, province, or land area/sector shall have their own economic policies. Instead of having federal form of government we could skip the political/administrative structures of having their own executive, legislative, and judicial branch and go straight to areas of tax, labor, and business laws.

    In that scheme a Sector – not necessarily a province, region or island but they can be a combination of them – adopting economic policies of removing income taxes for wages, reducing taxes for business incomes, allowed shared of ownership of foreign investors etc. to be competitive.

    If for example a Sector would allow 100% foreign ownership of manufacturing plants but they are required to have their personnel to be consisting of at least 70% filipinos and at most 30% foreign. It would mean more jobs for filipinos. Another set-up would be the the total payroll must be at least 80% for filipinos and leaving at most 20% to foreign salaries and wages. thus this assures that the total amount salaries and wages shall be owned by filipinos. But of course this set-up is somewhat unnecessary as filipinos are more cheaper and his skill levels for manager and executive can acheive the same level as those foreign counterparts thus 100% filipino personnel could still be achieved.

    Another example would be tax exemptions, that if such sector offers 100% tax exemption then labor could transfer from sector to the more competitive sector. These are just examples for wage/salary competitiveness.

    On Another level, for land ownership, The National government could at least allow some sectors to sell land to foreigners. This would spur development of business districts for that Sector.

    In other words, if we can come up with a system that could cater to protectionist Filipinos while opening up opportunities for our foreign investors then what stopping us? Ok! I Know the answer, it the filipinos themselves… right!

  55. Voltron05 permalink

    hehehe,they never learn haven’t they?Those priests r the true morons of the Phil.it looks like they r the most sickest scumbags in history.They r saying that they r the chosen one and too invincible.Oh man I’M BEGINNING 2 GET UPSET NOW ABOUT THE CATHOLIC PRIEST IN THE PHIL.THEY SHOULD BE DESERVED 2 DIE!!!!!!!!!!!!!!!!!!!!!!! AND GET RID OF CATHOLIC RELIGION IN THE PHIL. AND STARTED W/A NEW ONE.THOSE PRIESTS HERE IN THE PINAS R INTERFERING W/THE POLITICS TOO MUCH!!!!!!!!!!!!!!!!!!!

  56. Voltron05 permalink

    hahha and our new p-noy is a idiot.hahhaha I kinda listen to the news in radio about that issue bou now I kinda sick and tired of it and oh yeah I just boycott the news here in the Pinas now since they r sucking it up to P-noy.Man I’m sick and tired of the news about P-noy and it’s bastard cabinet things r so much better if the old constitution is still there.JEEZ GET RID OF THE 1987 CONSTITUTION BULLSHIT AND START HAVING THE NEW ONE ALREADY.THAT CONSTITUTION IS STUPID AND SO DOES THE IDIOT AND MORONS WHO WAS IN THAT EDSA 1 STUPID SHIT.

  57. Ah, here’s a better reference, from Ali & Partners.

  58. stratt3538 permalink

    I agree 100% that the constitution damages and has retarded economic growth for the Philippines. The FDI negative list needs to be cut and the 60/40 rules changed.
    The country needs capital and the most efficient way to achieve that is from foreign investors. Foreign investment / investors can produce industries that will provide continuos and sustainable growth in the nation.
    In order for to attract investors they need to feel secure that they own their company and the land that they will build their investment on.
    Would you want to spend a large sum of money on leased land knowing that when the lease expires the property owner can extort exorbitant amounts for rent, or outright kick you off your land?
    Would you be interested in investing large sums of capital when you will not have an equal say on how the the business will be operated and money spent?
    How will the Philippines raise the capital to grow industry? Massive government borrowing to loan to local corporations and individuals? This significantly will multiply the risk of the loan and ultimately leave the government (and ultimately the Filipino) responsible for any borrower that defaults on the loan. It can also be noted that the government has tried this approach numerous times notably in the 70’s and 80’s and it did not work.
    A company that starts operating in the Philippines will be positive regardless of the industry, be it financial, mining, petroleum, agricultural, etc. There will be jobs that did not previously exist, there will be a company operating, paying tax and ultimately raising the GDP of the country. It all works out the same despite the ownership. I know many people here are can not stand the idea of profits going into the pocket of a foreigner. After all, it is much better going into the pocket of someone like a Lopez, or a Tan.
    I know this is a broad statement, but I don’t want this post to become super long, so I guess I can get into a more micro level as criticism comes up. And I look forward criticism and opposing ideas. I enjoy debating economics issues.

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