MANILA, Philippines - The International Monetary Fund says it will be tough for the Philippines to compete for investments, especially as regional economic activity accelerates, if it doesn't relax foreign ownership limits.
While net foreign direct investment, such as money put into factories instead of the stock market, rose 20 percent to $3.2 billion last year, this pales in comparison with most of its neighbors.
Many economists and members of the business community blame laws that ban foreigners from some industries, or set a cap of up to 40 percent.
When asked if the Philippines can be competitive without reducing or eliminating these, Naoyuki Shinohara, deputy managing director of the International Monetary Fund, said it would be a challenge.
"I think that will be very difficult," Shinohara said in an interview on the sidelines of the World Economic Forum-East Asia in Manila.
"The Philippines has a growing population, a young population, relatively well educated, English-speaking," he said. "And it has resources, lots of mineral resources, tourism, things like that. So it's a good destination for investment to come in from abroad.
Shinohara said foreign ownership is one of the issues that make FDI in the Philippines "very difficult."
"Not just foreign ownership, but there is also red tape. I believe the administration is working on these but it takes time," he said.
President Benigno Aquino has said 90 percent of the economy is open, and to open it up more, which may include amending the constitution, will use up "political capital" needed for other changes.
His position has kept the Philippines out of the first round of negotiations for the U.S.-led Trans-Pacific Partnership.