trade liberalization of the Philippines is in connection to its adherence on itsmembership in World Trade Organization (WTO). It includes lifting of import restrictionson certain agricultural products, elimination of duties on certain industrial andinformation technology products and the creation of a four-tier tariff schedule. In 2000'sthere were further trade policy reforms. By 2008, the Japan Philippines EconomicPartnership Agreement (JPEPA) was entered into by the country, which is said to be itsfirst bilateral free trade agreement. By 2010, duties were eliminated on 99% of productsin the Inclusion List of the Common Effective Preferential Tariff (CEPT) scheme of theASEAN Free Trade Area (AFTA).Investment policy also underwent through a lot of reforms. One important pace duringthe 1980’s was the passage of the Omnibus Investment Code (OIC) of 1987. itsimplified and consolidated previous laws of investments and imposed two incentives,to wit, the provision of income tax holiday for enterprises engaged in preferred areas ofinvestment and taxable income deductions for the use skilled and unskilled workers thatsatisfy certain Philippine Board of Investments (BOI) requirements. Other incentivesare: tax and duty exception on certain capital equipment and accompanying parts, taxcredits on domestic capital equipment, employment of foreign nationals for technicaland advisory positions for a certain period, and simplified customs procedures. Otherliberalizing reforms on investment are the: Foreign Investment Act of 1991; in 1994,foreign banks were allowed to acquire up to 60% ownership of domestic banks; in 1995,Republic Act 7916 allowed greater private sector participation in the development andmanagement of the country’s special economic zones and expanded the activitiespermitted within the zones; in 2000, the General Banking Law and the Retail TradeLiberalization was passed. Though liberalization policies in FDI were imposed, barriersare still present, especially on the constitutional provisions which restrict certainindustries and foreign ownerships.8Present State of Trade and Foreign Direct Investments (FDI)Increasing trade and investments are some of the results of economicglobalization. These two plays an important role in the growth of the economy of thedeveloping countries.9FDI is an important factor in the economic growth and is avaluable capital.10To further understand, according to the investopedia, Foreign DirectInvestment or FDI is an investment made by a company or individual in one country toanother country. FDI comes in many forms (ownership or controlling interest in a foreigncompany).11Year 2014, the United Nations Human Development Report (UNHDR)stated that Philippines has the lowest FDI percentage among ASEAN members.
