Ratifying the Regional Comprehensive Economic Partnership (RCEP) will help the Philippines attract more foreign direct investment, a trade official said.
“In addition to the huge domestic market of 110 million people, the Philippines offers access to the ASEAN market of over 600 million people, and other key markets through our free trade agreements. (FTA) and our Generalized System of Preferences (GSP) with other countries and regions,” Commerce Secretary Ramon Lopez said.
RCEP, which includes 10 Southeast Asian economies plus China, Japan, South Korea, New Zealand and Australia, is the world’s largest trade pact by gross domestic product. (GDP).
First proposed in 2012, the deal was finally sealed following a Southeast Asia summit on November 15.
Lopez said RCEP further consolidates Asean’s economic partnership with its regional partners.
“For the Philippines, specifically, RCEP presents an enhanced platform to attract investment in export-oriented manufacturing,” he said.
According to Lopez, RCEP accounts for almost a third of global GDP in 2019.
“With a combined GDP of $25.8 trillion, said trading bloc is larger than the United States-Mexico-Canada Agreement and the European Economic Area, which includes the EU27, Norway, Iceland, Liechtenstein and, during the transition phase, the United Kingdom,” Lopez said. The EU is the European Union.
“It should be noted that the importance of RCEP is not only due to the integration of the market. It is very important to continue the integration of the production networks of its members by allowing a greater accumulation of the rules of origin, presenting harmonized rules and procedures that facilitate trade and covering areas such as services and intellectual property,” he added.
Lopez said the signing of RCEP, according to the United Nations Conference on Trade and Development’s recent Investment Trends Monitor, could help kick-start foreign direct investment growth.
Laws needed to stimulate investment
In addition to RCEP, Lopez said full implementation of the Business Recovery and Business Tax Incentives (Creation) Act and passage of the remaining economic reform bills will also help attract investment.
“Creating that is definitely a milestone and a new landmark incentive law. It provides the government with the flexibility to grant tax and non-tax investments for high value-added strategic investments. A responsive SIPP (Strategic Investment Priorities Plan) is being developed to support the country’s rapid recovery,” Lopez said.
“Other government support and legislative reform proposals to ease investment restrictions, such as the Civil Service Act, the Retail Trade Liberalization Act (RTLA) and the Foreign Investment Act, should also contribute to accelerating the country’s growth. noted that these reforms should be approved by October 2021,” he added.
The RTLA amendment aims to reduce the paid-up capital of foreign retail companies from 120 million pesos ($2.5 million) to 50 million pesos, while the PSA amendments propose that utilities be described and distinguished from public services. Utilities can only have ‘natural monopolies’ in distribution and transmission of electricity, water and sewage, while bill to amend foreign investment law eases applicable rules to foreign companies.