THE country’s poor adherence to the rule of law hinders the entry of more foreign investments, an international think tank said.
The Heritage Foundation—an international research think tank based in Washington, D.C., which analyzes and formulates public policies based on free enterprise—said that while the country has made distinct advancements in several areas of the economy, a lot of international investors still shy away from the Philippines owing to the poor implementation of laws in the country.
It noted that the country’s measure of the rule of law fared “far below the world average.”
The Heritage Foundation representatives who recently visited the Philippines further noted that, aside from what the country is currently focusing on right now, such as wooing investments and easing doing business to ramp up foreign direct investments (FDI), a lot of businesses still see the inefficient judicial system as one of the biggest hindrances in putting up capital for enterprises in the country.
The country’s FDI inflows have long been criticized for being one of the lowest in the region, amid the local economic boom. As such, the government is working to attract more FDI, as these are long-term investments that generate multiplier effects for the economy.
Latest data from the central bank showed that FDI grew by 61.6 percent from January to November last year, to hit $5.7 billion during the period.
The think tank noted the “widely varied performance” of the judicial system in the country.
What the Philippines should do to improve the sector, according to the international research institution, is focus on efforts to eliminate influence peddling in the country’s judicial system and the elimination of court corruption.
It added that a court system of equal access to public—including to local and international enterprises when settling business disputes—is the kind of reform that may improve investment sentiment in the country.