The National Economic and Development Authority (NEDA) is hopeful that recently enacted major laws will attract more investments and generate more jobs in the manufacturing sector, a key economic growth driver.
NEDA Undersecretary for Policy and Planning Rosemarie Edillon said in a recent webinar that the new laws amending the Retail Trade Liberalization Law (RTLL), Foreign Investment Act (FIA) and Public Service Act (PSA) are expected to bring positive impacts to the manufacturing sector.
The amended RTLL, or Republic Act (RA) No. 11595, was signed into law on December 10, 2021, and its Implementing Rules and Regulations was issued on March 9 this year.
The measure reduces the minimum paid-up capital requirements for foreign retail enterprises from P30 million to P25 million, removes the requirement for a certificate of pre-qualification to the Philippine Board of Investments, and lowers the investment requirements for each store owned by a foreign enterprise.
Edillon said the RTLL will assist small manufacturers by providing Philippine goods and services access to global stores and markets.
“This is one way to promote quality amongst our locally manufactured products because if it gets into this global store, then there will be that insistence on quality,” she said in her presentation at the Department of Trade and Industry’s Manufacturing Summit 2022.
Meanwhile, the amended FIA, also known as RA 11647, was signed into law on March 2, 2022. It aims to promote and attract foreign investments by allowing, for the first time, international investors to set up and fully own domestic enterprises (including micro and small enterprises) in the Philippines.
Edillon said that under FIA, foreign businesses employing foreign nationals must devise an understudy or skills development program that benefits Filipino workers. This ensures that local workers will receive relevant knowledge and skills from their foreign colleagues.
On the other hand, the amended PSA (RA 11659), signed into law last March 21, allows up to 100% foreign ownership of public services in the country, something that is seen to attract more investments in critical public services, thereby improving their quality while lowering the costs for consumers, Edillon said.
Under the PSA, the telecommunications, railways, expressways, airports, and shipping industries will be considered public services, allowing up to 100% foreign ownership in these sectors.
“Even [with] just the threat of the entry of a competitor, the quality of some of our utilities has kind of improved this past year, and we hope that this continues. In addition to the improvement in quality, we want it to be more affordable,” Edillon said.
She also gave an update on the National Innovation Agenda Framework, disclosing that it has just been approved by the National Innovation Council. The Framework will lay down the country’s 10-year roadmap for innovation governance across 10 priority sectors to achieve “a smart and innovative society that is inclusive, productive, resilient and sustainable.”
These 10 sectors—manufacturing and trade, food and agribusiness, energy, blue economy and water, transportation and logistics, finance, health, security and defense, learning and education, and public administration—will be the focus of development, funding, and innovation in the next decade.
“Whatever shock will come, if we have a smart and innovative society, then right away they can come up with solutions and ways to adapt to this new environment,” Edillon said.
She added that they hope to disseminate the Framework “probably in two weeks’ time.”
The executive also touched on the Philippine Innovation Act (PIA) as another measure benefitting manufacturing. PIA (RA 11293) was signed into law on April 17, 2019 to guide the country’s innovation goals and make the policy environment in the country conducive to more science, technology and innovation efforts.
For the manufacturing sector, the official said being eyed are innovations that enable a more efficient, smart, integrated, sustainable and agile process in the manufacturing, buying and selling of goods and services.
Subsectors in manufacturing identified for innovation are those that can provide quality goods and services linked to advancing housing development, connectivity, education, tourism, agriculture, health and wellness, and financial services.