AUSTRALIA is asking the Philippines to reconsider the existing structures on trade and particularly asked policy-makers to take a good look at the Trans-Pacific Partnership Trade (TPP) pact, saying that the proposed agreement presents an enormous potential for Filipino entrepreneurs.
On the TPP, which Australia is part of, we hope to see the Philippines will think very seriously on working toward future membership, Dr. David Dutton, Australian deputy head of mission to the Philippines, told financial journalists at the Australia-Philippines Policy Forum held in Makati City on Thursday.
The Australian envoy said such an endeavor further opens up opportunities in Australian gas, mining and oil sector, as well as in particular professional services that are currently only open to Filipino nationals.
According to the diplomat, the country’s stringent limitations on foreign direct investments help limit the country’s suitability to the ambitious trade pact and urged that they be reconsidered.
We don’t know how large of an impact the [constitutional] limitations will have, since the TPP is still being negotiated. But, certainly, there will be hurdles to get over if the Philippines decides to join. I think we certainly could expect that many TPP partners would like to see some relaxation in foreign investment rules,
The Philippines has so far held TPP technical consultations with Malaysia, Australia, the US, New Zealand, Mexico and Canada. The Philippines has also expressed interest in forging free-trade agreements with Canada, Peru and Chile, which are seen as building blocks for the TPP.
The 1987 Constitution explicitly restricts foreign ownership and management in a number of sectors, like the exploitation of natural resources, public utilities and nonsectarian educational institutions or corporations.
A Congress-led move allowing amendments to the economic provisions in the Constitution gained ground last year butquickly stopped in June, much to the dismay of foreign and local business groups.
Legislators reasoned there may not be enough support to ensure its passage and deferred voting on the resolution.
Other barriers to better trade and investment flows include market domination of large players in particular sectors, electricity costs, disconnect between local and national laws, among other issues.
In the context of Australia-Philippines economic relations, should the Philippines change its tune on foreign-investment limitations, it could diversify investments from the current areas in the business-process outsourcing (BPO), telecommunications, insurance, banking and engineeering services, the Australian envoy said.
According to Dr. Paul D. Hutchcroft, lead governance specialist at the Australian Embassy, A$1 billion had been poured in terms of investment the past year with total Australian investments since 2010 amounting reaching A$7 billion, driven largely by investments in the BPO space.
More opportunities lie in infrastructure, consumer goods, energy and education, according also to the Australian Trade Commission.
According to Hutchcroft, Philippine investments to Australia had been historically low with the exception of 2014, when Razon-led International Container Terminal Inc. bagged a terminal-and-container port-development project in Melbourne.
Two-way trade had been pegged at A$4 billion in 2014; from Australia’s side, its trade with the Philippines represented only 4 percent of total trade with the Asean, signaling more room for growth.
The Australian-Philippines Policy Dialogue was hosted by the Griffith Asia Institute, in partnership with the state-owned think tank the Philippine Institute for Development Studies.