Major stakeholders have warned that the country might lose foreign investments and trade opportunities if President Rodrigo Duterte continues to threaten businesses with closure.
The warning was aired by the American Chamber of Commerce of the Philippines (AmCham) following the recent rant of the President against the two telecommunications giants in which he threatened to expropriate them if their connectivity would not improve by the end of the year.
AmCham senior adviser John Forbes said Duterte's ominous target to nationalize public services – particularly the telecommunications sector — may cost the country much-needed foreign investments and opportunities.
He stressed that foreign traders might see the country as an investment risk due to Duterte’s threats.
"The warning to possibly nationalize major utilities in which there are billions of dollars owned by foreign investors could harm the external opinion of the country's investment climate stability," Forbes said.
The London-based think tank Fitch Solutions warned in July of heightened investment risks in the Philippine media and telecoms space, citing the “politicization” of this industry amid the government’s orders to shut down Sky Direct and ABS-CBN Corp.
Fitch Solutions downgraded the Philippine telecom industry's risk score to 46.1 points out of 100 from 57.5.
"The regulator's [National Telecommunication Commission] apparent ability to be influenced by the government continues to be a key impediment to foreign investor sentiment, and has also made the telecoms landscape difficult for both new entrants and existing players," Fitch Solutions said.
Former Kabataan Party-list Rep. Teddy Ridon has also expressed alarm that telcos could end up in a “very vulnerable situation” similar to ABS-CBN’s shutdown, in which the “President’s congressional allies file bills” calling for its sure expropriation as an unfortunate development.
Management Association of the Philippines (MAP) president Francis Lim also likened the telcos' fate to ABS-CBN’ and warned about the negative effects of expropriation on the country’s economic recovery after the pandemic.
This is not the first time Duterte has taken aim at the two telecom companies.
Amid widespread complaints of slow internet speeds in 2016, Duterte told Smart and Globe to shape up or face competition from China.
Dito Telecommunity, a joint venture between China Telecom and Davao tycoon Dennis Uy, has won a license to operate as third telco player in July 2019 but has faced difficulties building its network ahead of its commercial launch next year due to COVID-19 pandemic.