Philippines among the worst countries for FDI

Excerps from the IAB-report

  • Smaller countries have fewer restrictions on foreign ownership of companies, while larger countries—such as China, Mexico, the Philippines, and Thailand—are among those with the most.
  • Several countries in the most open regions do not impose any restrictions in any of the sectors covered by the indicators; these include Chile, Georgia, Guatemala, and Montenegro. In contrast, economies such as China, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam restrict foreign participation in many economic sectors. The Middle East and North Africa is also a relatively restricted region, with countries such as Morocco and Saudi Arabia limiting foreign capital participation in many industries.
  • It is also the case that the performance of FDI inflows to East Asia and the Pacific is uneven, and varies with the yardstick used. According to UNCTAD, between 2000 and 2007, China, Malaysia, Singapore, and Thailand received among the highest average FDI flows in the region in absolute terms.17 However, when FDI flows and stock data are calculated on a per capita basis, only Korea, Malaysia, and Singapore stand out. China, the Philippines, and Vietnam, among others, perform below average of the 87 countries in the IAB sample. And when FDI flows or stock data are ranked relative to the economy’s size (GDP), Korea, Malaysia, Singapore, and the Solomon Islands do relatively well, while the other countries in the region rank below the average of the countries included in the IAB 2010 report.
  • Further disaggregating Investing Across Sectors data to the level of individual countries reveals the gap between the most open and closed economies to foreign ownership. On the one hand, more than 10% of the countries surveyed do not have any restrictions on foreign ownership in any of the sectors measured. These countries receive a full index score of 100 in all sectors. On the other hand, many countries in the world not only limit foreign ownership in some sectors, but altogether prohibit foreign capital participation in specific sectors. Ethiopia, the Philippines, and Thailand are amongst the world’s most restricted economies, with an indicator score of 0 for several sectors. The following economies restrict foreign ownership in one third or more of the sectors measured by the indicators: Bolivia, China, Ethiopia, Greece, India, Indonesia, Malaysia, Mexico, Morocco, the Philippines, Saudi Arabia, Sudan, Thailand, and Vietnam.
  • Foreign ownership is largely unrestricted in the primary sectors. Agriculture is the least restricted industry, followed by mining and forestry. In 5 of the 7 regions measured by the indicators, there are no limits on foreign ownership in agriculture. Only Mexico and the following countries in East Asia and the Pacific have ownership restrictions in this sector: Indonesia, Malaysia, the Philippines, and Thailand. Oil and gas sector has relatively more restrictions, particularly in the Middle East and North Africa.
Arbitrating Commercial Disputes
All the countries surveyed in East Asia and the Pacific have laws on commercial arbitration and display them online. The laws generally offer broad party autonomy in arbitration, though some restrictions apply. For instance, Cambodia requires parties to choose an arbitrator who is a member of the National Arbitration Center. In Indonesia arbitrators must be at least 35 and have 15 years of experience in the field. Most countries in the region have active arbitration centers, with the exception of Cambodia, Papua New Guinea, and the Solomon Islands. Enforcement of arbitration awards is slow in most of the region, taking more than a year in the Philippines and Thailand. Papua New Guinea, Thailand, and Vietnam are not parties to the ICSID Convention. In addition, Papua New Guinea has not ratified the New York Convention.
Examples of restrictions on nationality or residency of company board members or managers in IAB countries
Philippines: The number of directors can be no fewer than 5 and no more than 15, the majority of whom should be residents.

One comment

  1. I enjoy reading your posts as they are very informative. I notice that you lean to a free market position in economics and have a more or less libertarian political view. You are also not afraid of saying what everybody knows but is afraid to say, even if such strong opinions hurt public sentimentality and violate political correctness(i.e. social democracy). Social change in the Philippines can only be brought about by those who stay away from the madness of the crowds and superstitious political beliefs. And believe me, there are others out there who are sick of all the insanity in politics and want their voices to be heard through writing, publishing, and maybe activism. Anything to put a dent in the intellectual status quo (w/c is social democracy). That being said, I would like to invite you to join a group of like-minded(Austro-libertarian) Filipinos. You can add yourself to the facebook group “Filipinos for Ron Paul” if you are interested.

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