March 5 (Bloomberg) -- The Philippines plans to propose legislative measures to ease curbs on foreign direct investments and help reduce unemployment, Economic Planning Secretary Arsenio Balisacan said.
Discussions with lawmakers are taking place on ways to ease foreign-ownership limits in areas such as utilities, trade and education, and loosen rules for foreigners to engage in professions including medicine and accounting, Balisacan said in an interview in his office in Manila yesterday.
“Many of these restrictions are out of place, out of context,” Balisacan said. “The intention is to improve the investment climate. We want to make the economy more efficient and create more jobs.”
President Benigno Aquino is seeking more overseas investments that will reduce the nation’s dependence on remittances and lower Asia’s second-highest unemployment rate. The government plans to double its job creation target to at least 2 million a year, Balisacan said.
The peso rose 0.2 percent to 40.73 against the U.S. dollar as of 10:25 a.m. in Manila. It is the biggest gainer in the past 12 months among 11 Asian currencies tracked by Bloomberg. The yield on the 9.125 percent bond due September 2016 fell 16 basis points to 2.94 percent, the lowest since 2006 when the notes were first sold, according to Tradition Financial Services.
Investment pledges climbed to a record $15.9 billion last year, Philippine Trade Secretary Gregory Domingo said last month, as Japanese companies including Murata Manufacturing Co. boosted expansion plans. The nation’s jobless rate of 6.8 percent was the highest in the region after New Zealand’s 6.9 percent, data compiled by Bloomberg show.
The government is also studying looser restrictions on aviation and may allow foreign airlines greater access to boost tourism, Balisacan said. The review on ownership curbs won’t include areas restricted by the Constitution, Finance Secretary Cesar Purisima said in a Feb. 19 e-mail.
The economy grew 6.8 percent last quarter, beating expansions in Malaysia and Indonesia and helping propel the peso to a near five-year high in February. The Philippine Stock Exchange Index surged to a record last week, and net portfolio inflows were almost six times more in January from December.
Last year, Bangko Sentral ng Pilipinas announced limits on lenders’ currency forward positions, banned overseas funds from special accounts and expanded monitoring of banks’ real-estate exposure as it stepped up efforts to curb capital inflows. It reduced the rate on special deposit accounts in January while holding its benchmark interest rate at a record-low 3.5 percent.
Further cuts in the SDA rate cannot be ruled out to “address our price and financial stability objectives,” Governor Amando Tetangco said late yesterday.
“Any further action on the SDA and its operations will depend on data coming from the advanced economies, as well as price action and activities of both local and foreign players in our domestic financial markets,” Tetangco said in an e-mail. The change in SDA pricing could be viewed as an initial step toward moving to an interest-rate corridor approach, he said. The BSP’s next policy meeting is on March 14.
Gains in the peso and rising portfolio inflows are concerns, Balisacan said yesterday. The government may review the current exchange-rate assumption of a range of 42 pesos to 45 pesos per dollar, and is working to boost demand for dollars by accelerating its infrastructure program to help slow the currency’s appreciation, he said.
“The trick is to grow the demand side as fast as the supply side,” Balisacan said. “If we get our infrastructure moving, we should be able to generate demand for dollars, increase productivity and make companies more competitive.”
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