EUROPEAN COMPANIES, particularly those involved in construction, are reporting a slowdown in orders as an offshoot of the corruption scandal in public works, the European Chamber of Commerce of the Philippines (ECCP) said.
Florian Gottein, ECCP executive director, said some members of the chamber produce materials used for infrastructure projects.
“Because some of those projects are now being put on hold, they have experienced a reduction in sales, and it might go on for the next couple of weeks and months,” he told reporters on the sidelines of the Arangkada Forum on Thursday.
Such concerns are being raised by European firms doing business in the Philippines rather than those that are yet to invest in the country, he said.
“But the matter has also made it to the news in our respective home countries. And definitely it is not the best picture we are sending out there,” he added.
He said that the business community is still gauging how far the allegations will go, whether they affect only involve flood control projects or other categories of infrastructure as well.
“For now, we are still in a wait-and-see position…The chambers have made statements that it is definitely not a conducive environment for business here, but we trust in the government and the responsible organizations to investigate and immediately act on their findings as well,” he added.
Asked how corruption will affect free trade agreement negotiations, he said the government must act quickly to investigate and determine the next steps.
“We also hope that we will see safeguards in place that will prevent similar situations from happening again in the future,” he added
He said that ease of doing business (EoDB) remains a top concern for European investors in the Philippines, even more than corruption.
“Corruption is one topic, but I think what is really of more concern to our members is the EoDB,” he said.
“We have a beautiful EoDB law, but I think many of our members are struggling with its proper enforcement, proper implementation, or the lack thereof,” he added.
He also said that the cost of doing business in the Philippines is also a concern for investors.
“If you compare the cost of doing business here in the country to other countries in the region, it is higher here, and I think corruption plays into that,” he said.
“When you want to participate in government-funded projects, there are kickbacks, and what we see now is 25-30% of the project cost is being siphoned off. It also plays into the topic of why the cost of doing business is so high in the Philippines,” he added.
In its Reform in Motion: 15 Years of Arangkada and the Road Ahead policy book, the Joint Foreign Chambers of Commerce of the Philippines (JFC) presented its priority executive actions.
These include the improved implementation of the EoDB Act, the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, and the Ease of Paying Taxes Act.
It also asked for a reconsideration of the use of digital and integrated systems for the pre-border technical verification and cross-border electronic invoicing of all imported commodities and Food and Drug Administration revised registration fees, as well as streamlined travel requirements and visa applications.
It also sought a review of taxes on non-resident foreign corporations and the Extended Producers’ Responsibility Act. — Justine Irish D. Tabile