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Organized by the

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Organized by the

     ASIAN REGIONAL SEMINAR ON ASIAN REGIONAL SEMINAR ON

    EXPORT COMPETITIVENESS AND THE ROLE OF FOREIGN DIRECT INVEST (FDI): EXPORT COMPETITIVENESS AND THE ROLE OF FOREIGN DIRECT INVEST (FDI):

    ENHANCING LOCAL FIRMS COMPETITIVENESS THROUGH LINKAGES WITH TRANSNATIONAL ENHANCING LOCAL FIRMS COMPETITIVENESS THROUGH LINKAGES WITH TRANSNATIONAL

    CORPORATIONS (TNCS) CORPORATIONS (TNCS)

    Organized by the

United Nations Conference on Trade and Development (UNCTAD), Geneva

    and the

    Chinese National Centre for Studies on Multinationals

    Tianjin, China

    11-13 December 2001

    INSTRUMENTS USED AND POLICY TOOLS INSTRUMENTS USED AND POLICY TOOLS

    TO ATTRACT EXPORT-ORIENTED TO ATTRACT EXPORT-ORIENTED

    FOREIGN DIRECT INVESTMENTS (FDI) FOREIGN DIRECT INVESTMENTS (FDI)

    IN THE PHILIPPINES IN THE PHILIPPINES

    Wednesday, 12 December 2001

    14.00-18.00: Session IV

    Prepared for

    MR. GERONIMO D. STA. ANA

    Governor

    Board of Investments

    5/F Industry and Investments Building

    385 Gi. J. Puyat Ave., Makati City

    Tel. No. 896-9940; 897-6682 loc. 318; 896-9285

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    Email: GDStaana@boi.gov.ph

    I. POLICY TOOLS IN FDI TARGETING (GENERAL/BEST PRACTICES):

    The most successful investment promotion program is to target specific types of investors. Targeting involves a number of choices revolving around industries, firms and activities and home countries. It requires extensive research to identify firms that are likely candidates to invest in the country and ways in which those investments can be made to meet investor needs and development objectives. If done well, targeting can identify new investment opportunities arising from the spread of integrated international production, such as functional niches for developing countries in fields such as accounting, data processing and the programming of software applications. Targeting can also help in identifying foreign firms that might complement domestic firms through backward and forward linkages, thereby strengthening national technological capabilities and production capacities.

The MIGA- (Multilateral Investment Guarantee Agency a member of the World

    ), of which the Philippines is a member, has presented the ideal way of Bank Group

    targeting companies, as follows:

     Criteria for choosing likely candidates (by industry basis)

    ; Largest international players (by foreign assets)

    ; Plot the players

    ; Company characteristics

    ; Company outlook (forecast)

    ; By income data

     Sales

     Earnings

    ; By non-income data

     Industry trends

     New technologies

     New Products

     Customers/Suppliers

     Capacity ratios

    ; By capital spending outlays

     Various Published Sources of company/industry information

    ; Business magazines (e.g. Industry Week, Business Week, Fortune, Forbes,

    Asiaweek, FEER, Asia Now, J@pan Inc., Der Spiegel, The Economist)

    ; News Papers (e.g. Wall Street, Journal, Barron‟s, NY Times, Washington Post,

    Financial Times, Daily Telegraph, The Times, The Guardian, Asahi Shimbun,

    Daily Yomiuri, Japan Times, Nikkei Journal, Montreal Gazette, Vancouver Sun,

    Toronto Star, Le Monde, Le Figaro, Die Welt, Die Berliner Zeitung,

    International Herald Tribune, USA Today, Wall Street Journal Asian Edition,

    Regional Newspaper)

    ; Periodicals (e.g. US Industry and Trade Outlook, Japan Company Handbook stnd & 2 Section) (1

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MIGA as ONE-STOP-SHOP

    ; IPAnet (www.ipanet.net)

     Foreign Direct Investment Portal

    ; PrivatizationLink (www.privatizationlink.net)

    ; Customized “Internet Resources” through this program

    The next step is to check the readiness of the country‟s investment environment / climate, then, the readiness of the Investment Promotion Agency to undertake

    promotional activities.

Is the country prepared? (This identifies the different factors that influence

    investments, particularly the foreign direct investments.)

    ; Political stability

    ; With necessary skill levels

    ; Business environment

     Customs clearance

     Logistic efficiencies

     Operating costs (real estate, taxes, utilities, etc.)

     Is the Investment Promotion Agency prepared?

    ; Agency Structure

     Management Buy-in

     Staff readiness

     Staff dedicated time

     Systems in place

     Financial resources

IDEAL INSTRUMENTS/MEASURES USED BY AN INVESTMENT PROMOTION AGENCY

    TO ATTRACT AND TARGET FDI (BASED ON MIGA)

Image Building

    ; General advertising and public relations

    ; Media relations and press tours

    ; Participation in international conferences Investment Generation

    ; Overseas promotion missions and seminars

    ; Direct mail and telemarketing

    ; One-on-one meetings with investors

    ; Identification of investment opportunities Investment Servicing

    ; Pre-investment counseling

    ; Business visit facilitation

    ; Information and market research

    ; Business partner identification and match making

    ; Coordination of investment approvals and incentives process

    ; On-going red tape “trouble shooting”

    ; Assistance in mobilizing finance

    ; Investor follow-up and aftercare

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    The role of incentives for inward investment has never been conclusive. However, it remained to be an important policy variable in the development strategies of the Philippines.

The granting of preferential access to external markets, through bilateral, regional

    , would greatly enhance the investment promotion and international agreements

    efforts of developing countries like ours, as a minimum market size is an important prerequisite for many investors.

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    II. INSTRUMENTS AND POLICY TOOLS USED / EMPLOYED BY BOI

    TO ATTRACT AND TARGET EXPORT-ORIENTED FDI

    The Philippines have liberalized the policy environment and legal framework in favor of FDI. Although worldwide FDI flows expanded, much of it is concentrated in a small number of countries. Unfortunately, for the Philippines, the level of FDI inflows does not meet the required expectations. With the investment policy regimes becoming increasingly open, the BOI find ways to undertake additional promotional efforts to attract FDI inflows of the desired level and consonant with their development objectives.

    Presented below are the instruments used/adopted by the BOI to promote investments and the corresponding laws / policy tools that impact our investment promotions tasks. Examples of these laws / policies are the Foreign Investment Act (FIA), Investment Priority Plan (IPP), Export Development Act (EDA), Retail Trade Act, etc.

    Instruments Used in Description and Status Target Tasks Investment Promotion Beneficiaries

     I. BUSINESS / INVESTMENT PROMOTION Putting together characteristics of a o IMAGE BUILDING country/region to form a positive picture in the minds of investors & businessmen through various marketing activities. Press Relations (PR) Press / Media Systematic and continued partnership / collaboration with the press / media o Invitation of Foreign (International & (local / international) in the promotion Journalist Local) of the Philippines as an investment o Press Releases / destination. Information o Cooperation/Partnership STATUS: Not so active on this. with the Media/Press o Media Blitz / Advertising (Print, TV, Internet, Video)

    Companies Marketing Tools / Development of various medium to Investment Collaterals (IC) promote the Philippines as investment (local and foreign) site. o About the Philippines (as an investment site)

     STATUS: Internet and Multimedia In the process of enhancement Brochures, Investment available Kits, Posters, available upon request Newsletters on-going Freebies and Giveaways available Direct Mailing

     Presentation Materials (e.g. Slides)

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     Companies Representations Abroad Support, assistance and coordination (e.g. Philippine Trade and with PTIPOs as part of BOIs (local and foreign) Investment Promotions promotional effort. Office PTIPO) STATUS: On-going

     ; Event Marketing Considered as a focused promotional

    campaign, e.g. Philippines as the Partner Country in Hannover Fair „98 STATUS: On-going

     Networking Collaboration and cooperation with Foreign Embassies, Bilateral Counterparts, Chambers, Business Councils and Associations. STATUS: On-going

     o INVESTMENT Companies Involves various activities that generate GENERATION investments directly or indirectly (e.g. (local and foreign) missions, conferences, site visits, etc.) STATUS: On-going Mission (Inbound & Outbound)

    o Investment Seminar

     General Specific o JV Matching o Sector Focused (e.g. IT services) o Regional Focused o Subcontractors/Suppliers Matching

    o Company Specific

     Regular Trade Fairs and Exhibits o Japan (G-BOC, JETRO, Keidanren) o Italy (BORITEC) o Germany (Hannover Fair)

     Investment Clinics

     Investment conferences and fora

     Direct Marketing

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    Companies o INVESTMENT Identifies the pre-, during and post SERVICING services which the BOI extends to its (local and foreign) clients. Investment consultancy & STATUS: On-going counseling

     Business visit facilitation Business Information Project Study Facilitation Follow-up

     Joint Venture Matching Registration of Projects for Incentives Availment One-Stop-Action Center IPU (Investment Promotion Units) Assistance

     Companies o SPECIAL Foreign-funded projects (which includes

    BILATERAL the generation of investments from the (local and foreign) PROJECTS host country). STATUS: On going. Italy (ICE ROME / Italian Trade Commission) Switzerland (SOFI) EU (Asia Invest Program) Germany (ECIP Facility 1) Canada (PEARL Project) Foreign Desk Offices Delegate / Attachment Program

     Companies o BILATERAL Joint economic conferences aimed at

    ECONOMIC promoting a balance trade and (local and foreign) investments between countries. COOPERATIONS / CONFERENCES STATUS: On going. RP-Australia: Joint Economic Conference RP-Taiwan: Joint Economic Conference RP-China: Joint Trade Conference

     RP-Singapore: Philippine Singapore Action Plan (PSAP)

     RP-France

     RP-Bahrain

     RP-Czheck

     RP-Iran

     RP-India Joint Commission for Cooperation

     RP-Thailand Working Committee on Investments

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    Companies o OTHER A MOA among 8 investment promotion Linkage with IPAs on Harmonization of ACTIVITIES & agencies (IPAs), which is aimed at (local and foreign) Investment Promotion PROJECTS creating an integrated, collaborative, Activities/ Collaterals and harmonized investment promotions program for the Philippines. The MOA also designates the BOI as the lead agency in the coordination of all common investment related endeavors of the IPAs. This measure is geared

    toward the more efficient utilization of resources and efficient delivery of services.

Extension of Secretariat Support to different Business Councils

    o RP-New Zealand Business Council

    o RP-Australia Business Council

    o RP-Finland Business Council

    o RP-Singapore Business Council

    ; Other Projects

    o Translation of Investment Brochures into Foreign Languages

    o Asia Invest (Enterprise)

Laws / Policy Tools to Description Tasks Attract FDI

    II. Policy Making Omnibus Investments Provides incentives to registered enterprises in preferred areas Body Code (EO 226) of 1987 of investment as identified in the Investment Priorities Plan.

Foreign Investment Act of This law liberalized the foreign investment system in the 1991 (FIA) RA 7042 Philippines. Under this, most industry sectors were opened to 100% foreign equity ownership. Essentially all sectors (except those that relate to national defense and public morals) were opened to 100% foreign equity ownership except those in

    which foreign equity ownership is limited under other laws and those on a short transitory negative list. It stipulates processes and conditions under which foreign nationals may do business in the Philippines.

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     Special Economic Zone This Act oversees and develops economic zones. Under this, Act of 1995 as amended most of the zones were privately owned. It also gave incentives by R. A. 8748 Setting up to investors with projects to own and develop and economic the Philippine Economic zone, which are of several types: industrial estates, export Zone Authority processing zones, free trade zones, tourist and recreational centers, and IT parks.

     Retail Trade Liberalization It aims to encourage efficient and competitive retail trade Act of 2000 (RA 8762) among Filipino and foreign investors, with the goal of empowering the Filipino consumer by making available to them higher quality goods, better services and wider choices at lower prices.

     Power Reform Act of 2001 This Act paves the way for restructuring the country‟s power (RA 9136) industry, privatization of debt-laden National Power Corporation (Napocor) and opening the sector for competition.

     Build-Operate-Transfer The law enables the private sector to participate in the (BOT) Law RA 7718 financing, construction, operation and maintenance of infrastructure projects.

     E-Commerce Act of 2000 This law provides the legal and regulatory framework governing

    commercial and non-commercial transactions through the Internet. The law gives electronic messages and documents the legal effect, validity and enforceability of a written

    document and mandates all government agencies to use and accept them.

     Investment Priority Plan The Investment Priorities Plan (IPP) are identified and (IPP) . preferred areas of investment, which are given incentives

     eldc/buks

    Wednesday, November 28, 2001

    C:\ADHOCBUKAY\GOVSTAANAAsian Seminar.doc

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