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April 8, 2008

Investors worried over slow reforms

Foreign businessmen in the Philippines have warned that the country would be left behind in the race to attract investment due to the slow pace of economic reform.

Foreign direct investment (FDI) in the Philippines reached $2.9 billion in 2007 according to central bank data, compared with $8.8 billion in Thailand and $7.5 billion in Indonesia.

"The Philippines is underperforming in the region in attracting FDIs," the Joint Foreign Chambers of Commerce said in a letter posted on their web site Monday.

While the Chambers gave the government of President Gloria Arroyo good marks for clearing its backlog of paperwork, it said it was falling behind in transparency and fighting corruption.

"Much harder work will be required to catch up with Malaysia, Thailand and Vietnam," American Chamber executive director Robert Sears said in the letter, which was also sent to the Trade and Investment Secretary Peter Favila.

Sears said that the required changes were "perhaps too challenging given the slow pace of reform" but added that "the private sector is ready to work hard" to ensure the reforms are successful.

The chambers cited key areas where reforms are needed, based on a study made in 2006 aimed at attracting 36 billion dollars in foreign direct investment from 2007 to 2010.

The progress report, made in March, warned the government was "backsliding" in areas like making labour more competitive, making procurement contracts more transparent, promoting merit in the civil service and cracking down on tax evaders, smugglers and corrupt officials.

It also said the government had made "limited progress" in areas like setting a legislative agenda, clearing up red tape and road traffic and opening up the mining and energy sectors.

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