EDITORIAL

Economic diplomacy
Philippine Daily Inquirer / 04:40 AM September 12, 2022

President Marcos Jr. brought home $14.36 billion in investment pledges

during his first official foreign trip last week to Indonesia and Singapore.
Once realized, the 10 letters of intent and 12 memorandums of
understanding (MOUs) signed in renewable energy, data centers, e-
commerce, broadband technology, government housing, and agriculture
will be a big help to the country’s economic recovery from the impact of
the COVID-19 pandemic. Among others, the President saw $822 million
worth of commitments in textiles, energy, technology, and agribusiness,
and $7 billion in infrastructure for unsolicited private-public
partnerships (PPPs). In Singapore, the President secured a total of $6.54
billion worth of foreign investment pledges capable of generating 15,000
jobs.

There is more to Mr. Marcos’ first official foreign trip than these
investment pledges and commitments in noneconomic areas such as
defense and cultural relations. The state visits starting with neighboring
Indonesia and Singapore indicate the administration’s strategy of fueling
the economy with foreign investments. This was the same game plan
adopted by the late President Fidel V. Ramos, considered the country’s
top salesman given his numerous foreign trips during his term. Ramos
saw the Philippines returning to the radar of foreign investors by acting
as the country’s chief salesman. Investors were particularly attracted by
his administration’s push to modernize public infrastructure through the
expanded build-operate-transfer law.

This strategy is also made imperative by the difficult economic times the Philippines
is in. For the current administration, the primary reason for turning to foreign
investors is obvious: the government does not have enough money as it is burdened
with a ton of debt — about P13 trillion as of the last tally — due to the COVID-19
pandemic borrowings. Given its tight fiscal space or lack of funds, the Marcos Jr.
administration has already decided to tap more private-sector participation in its
infrastructure build-up plan via the PPP so that tycoons’ deep pockets can bankroll the
projects. But even private corporations are struggling to invest in the long list of
essential but long-gestating infrastructure projects the country needs due to the
pandemic, add to this the fact that rising interest rates globally have been raising
investment costs.
Compared to previous administrations, however, Mr. Marcos enjoys one big
advantage, even over Ramos, whose economic diplomacy was constrained by
constitutional restrictions on foreign ownership in many local industries. In contrast,
the climate for foreign investors has never been better, which the Marcos Jr.
administration should take advantage of. While former president Rodrigo Duterte may
not have been a good economic diplomat, he was instrumental in relaxing the barriers
to the entry of foreign capital. He signed last March the law amending the 85-year-old
Public Service Act. Considered a game changer, the law now allows full foreign
ownership of companies in select industries such as telecommunications, airlines, and
railways. Duterte also signed Republic Act No. 11647, which amended the Foreign
Investments Act of 1991 by relaxing the list of economic activities that foreigners
were barred from entering. The Retail Trade Liberalization Act of 2000 was likewise
earlier amended by lowering the required paid-up capital for foreign retailers.
There is one important point to consider though in all the investment pledges that
heads of state bring home with them after embarking on state visits. This was
highlighted by Mr. Marcos in his arrival speech from Singapore when he assured
Filipinos that the government will work hard to bring all of the investment proposals
to fruition. “We are all now going to bend ourselves to this work. We will not stop
until we can come back and say that these MOUs that we have started, these letters of
intents that we have started, already have their desired results,” he vowed. But for Mr.
Marcos’ diplomatic diplomacy to work, he must adopt a whole-of-government
approach in luring foreigners to put their money here. That is exactly what Ramos did.
As recalled by his socioeconomic planning secretary and now Inquirer columnist
Cielito Habito, Ramos instructed embassies, consulates, and honorary consuls abroad
to give greater focus on economic diplomacy. Foreign missions, he said, were directed
to put more of their energies and resources into seeking and seizing opportunities for
increased trade, tourism, investment, development assistance, and even economic
intelligence.
If Mr. Marcos plays his cards right in the economic diplomacy field, his
administration can easily breach the previous regime’s estimate of seeing $10 billion
in annual foreign direct investments to be drawn into the country by recent economic
liberalization measures. He must, however, engage the entire bureaucracy in this, lest
those billions of dollars worth of investment pledges will remain as they are — mere
promises.

https://opinion.inquirer.net/156884/economic-diplomacy