CHAPTER 24  Investment Promotion

 

Introduction

 

   A developing economy like Bicol region depends much on capital accumulation or investments to attain economic growth for poverty reduction. Investments, either domestic or foreign, public or private, are important growth drivers as they are expected to create more jobs, increase production, generate more income and provide a base for the overall development of the region’s economy.

 

   Creating a climate conducive to attract investments in an area is dependent on three key factors. These are: a) macroeconomic fundamentals that include reasonable and external balances, realistic exchange rate, low inflation and interest rates, competitive markets, social and political stability; b) infrastructure, since investments are naturally attracted to areas with adequate and quality roads, ports, and other essential infrastructure because such facilities affect a firm’s profitability due to the reduction in the production costs and ability to reach wider markets; and b) governance and institutions which refer to transparency and efficiency in regulation, taxation, and legal system, strong and well functioning financial sector, labor market flexibility and skilled labor force.

 

Situational Analysis

 

   The flow of investments to the region, however, has been somewhat sluggish. The regional economy is driven more by personal consumption spending rather than by capital formation investments. The drop in investments by 8.2 percent in 2005 was attributed to a sustained slump in construction (public and private) and a decline in durable equipment investments. The high cost of doing business brought about by several factors like cumbersome regulatory system and procedures, high cost of power, transportation and financing, remains the major constraint that discourages investors to come and do business in the region aside from concerns on the peace and order situation in some parts of the region. As such, the implementation of major industrial projects like the Bicol Regional Agri-Industrial Center (BRAIC), Provincial Agri-Industrial Centers (PAICs) and several special economic zones, that are deemed to propel the growth of the agri-industry sector of the region, are yet to materialize.

 

   It was observed that there were no sustained activities on investment promotion. One reason could be that promotion activities are too costly and fragmented such that they are done individually by LGUs, NGAs and the private sector. Likewise, there is no unit within the region's government beaucracy that promotes investments in industry, agriculture, tourism, infrastructure and social projects.

 

   Recognizing the importance of additional investments in the region, this chapter spells out the key activities that the local government units (LGUs), national government agencies (NGAs) and the private sector must do to scale up local and foreign investments in the region to reduce poverty.

 

Objective

   To increase investments in agriculture, trade and industry, tourism, environmental, social and infrastructure projects.

   Strategies

1. Focus investment promotions in priority areas and sectors identified by each LGU and along growth corridors (i.e., LINDGC).

2. Strengthen capability of LGUs, NGAs and private sector on integrated investment promotion, marketing and facilitation by:

1. Simplifying and streamlining government business procedures in the issuance of permits, licenses and certificates to reduce burden on the conduct of business;

2. Enforcing transparency of rules, regulations, procedures and policies to reduce corruption;

3. Creating LGU investment promotion units/centers patterned from successful investment promotions units in the country;

4. Promulgating ordinances by LGUs to create an environment conducive to investments;

5. Formulating a package of incentives, both fiscal and non-fiscal;

6. Publishing and disseminating brochures, flyers, posters, video tapes, DVD, etc. for investment promotion;

7. Conducting investment fora, domestic investment seminar-workshops, market matching, joint venture agreements and investment missions abroad; and

8. Conducting social marketing of investment projects.

3. Conduct extensive public and private investment promotion in agriculture, particularly on high value crops for a more modern, dynamic and competitive sector.

4. Advocate build-operate-transfer (BOT) and other schemes for infrastructure and social projects.

5. Provide local incentives to private forest tree plantations.

6. Investment in research and development and manpower development.

7. Development of a comprehensive investment portal for Bicol Region.

8. Strengthen networking between and among the LGUs, NGAs, business sector and the academe on investment promotion.

9. Conduct regular review of incentive policies and procedures.

10. Promote investments in Bicol by tapping overseas Bicolano workers and balikbayans as potential investors.

Programs and Projects

1. Creation of a Regional Investment Promotion Committee in the RDC

2. Training of LGUs on Streamlining Business Procedures

3. Creation of Investment Promotion Unit/Center in each LGU

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