There is not much point in maintaining the decades-old DTI-BOI institutional relationship.
The only way to objectively assess the performance of a Cabinet department is to measure the degree of accomplishments by the department of is operational mandate. This rule is of general applicability, and it applies to an assessment of the performance of the Department of Trade and Industry (DTI).
Until the 1960s DTI was called the Department of Commerce and Industry (DCI). During the parliamentary phase of the Marcos I era, it came to be known as the Ministry of Trade and Industry. The legislators apparently considered it more important to do something about the ‘Commerce’ part of DCI’s name than about the ‘Industry’ part. That was a mistake.
The lawmakers should have brought investment into the renaming exercise. There are two reasons for this. The first is that the structure of the Philippine economy has deteriorated to the point where industry, i.e., the manufacturing sector, is no longer one of its leading sectors. The other reason is that investment has become a far more important concern of the country’s economic authorities than industry.
The most recent Philippine Statistics Authority (PSA) figures for the performance of DTI and the Board of Investments (BOI) point anew to a need to alter the structure for the policymaking and management of trade and investment in the Philippines. The preliminary figures for 2025 indicate another massive deficit in this country’s external trade and another decrease in foreign direct investment (FDI) in this country.
The authors of the Investment Incentives Act of 1967 (Republic Act No. 5186) denied institutional independence to the BOI that they created. Instead, they attached BOI to the DTI. The idea was that BOI would provide the fiscal and other economic incentives that would motivate domestic and foreign investors to establish productive facilities that would be regulated by DTI. It is ironic that a strong agency – BOI initially had a powerhouse board of governors headed by the highly regarded Cesar Virata – would be merely attached to a weak mother institution. It was very much a tail-wagging-the-dog situation.
Almost 60 years after the passage of R.A. No. 5186, the time has come to correct the mistake that its authors made. The umbilical cord tying BOI to DTI should finally be cut. DTI should be divided into two institutions: a Department of Trade and Tariff and a Department of Investments. The justification for this is made up of two parts.
First, the crying need of the times is a surge in investment, foreign and domestic. The Philippines’ performance in the FDI domain has long been dismal. Despite the yeoman efforts of the BOI, this country has not been doing a good job of connecting with foreign investors. And the prospects of a turnaround in that experience is, realistically, unlikely to take place anytime soon. It is time to give the quest for investment – FDI and domestic – the focus and importance it deserves.
The second part of the justification for the separation of a Department of Investments from DTI is that DTI has not done much for, and has not made a substantive difference in the operations of, BOI. There is not much point in maintaining the decades-old DTI-BOI institutional relationship.
The split-up of DTI and the creation of a Department of Investments will represent a realization that DTI’s unsatisfactory investment and trade performances will continue if DTI is not restructured. Let a Department of Investments come into being.
(llagasjessa@yahoo.com)
