Israeli firms eye investments in PHL infrastructure, water sectors

ISRAELI FIRMS are interested in investing in the infrastructure, agriculture and water, and business process outsourcing (BPO) sectors in the Philippines.

Israel Head of Economic and Trade Mission to the Philippines Tomer Heyvi said that Israeli firms are awaiting the law amending the Public Services Act.

“BOT (Build-Operate-Transfer) projects, agriculture, and water are definitely interesting,” he said in a roundtable discussion with BusinessWorld editors and reporters on Feb. 28.

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For the water sector, Mr. Heyvi said Israeli firms are looking at desalination projects.

Congress last month ratified the measure amending the PSA Act, which was forwarded to Malacañang for President Rodrigo R. Duterte’s signature.

Once signed, telecommunications, domestic shipping, railways and subways, airlines, expressways and tollways, and airports will no longer be subject to the 40% foreign ownership cap under the Constitution.

However, distribution and transmission of electricity; petroleum pipeline transmission systems; water distribution systems; seaports and public utility vehicles will continue to be subjected to the 40% foreign ownership cap.

At the same time, Israeli Ambassador Ilan Fluss said Israeli firms are interested in expanding in the BPO sector in the Philippines.

“I think in terms of investments, it will be mainly in the BPO sectors so we have here Israeli companies that do BPO services and they found (that the) Philippines is a good place to outsource and I think it will only increase,” he said during the same interview.

Mr. Fluss said that Israel’s priority is to advance the relations between the two countries by focusing on economic development and innovation.

“What I would like to do is create what I call ‘innovation bridges’ between Israel and the Philippines,” he said.

Israel is known for its expertise on technology and innovation, with 13% of its gross domestic product coming from the high-tech industry. More than 300 multinational corporations have research and development centers in Israel. It also houses nearly 4,000 startup companies.

Total bilateral trade between Israel and Philippines reached a value of $338 million in 2019. Some of the trade between the two countries include agricultural products, semiconductors,  BPO services, and tourism.    

Meanwhile, an agreement seeking to improve economic and investment relations between Philippines and Israel is almost completed.

Nir Balzam, deputy chief of Mission at the Embassy of Israel in Manila, said the Philippine-Israel Investment Promotion and Protection Agreement (IPPA) is almost finished and may be signed before the Duterte administration ends in June.

“We just finished the negotiation last Thursday. There are a few internal issues that they have to resolve, both Israel and Philippines. Hopefully, it will happen in the second quarter and probably during this administration,” Mr. Balzam said.   

Mr. Fluss said the agreement will “give a really strong signal to the private sector.” He said the IPPA would ensure investors from both sides are protected, and there will be no interference in business interactions involving huge investments.   

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“The agreement provides how do you protect investors on both sides in case something goes wrong, how do you prevent governments from interfering in business interactions, and how do you make sure that this money is protected,” he said.

“I think the most important thing here when we sign this agreement is it’s a message from both governments, assuring investors that they are welcome, they are protected, their money is protected, and the two governments want to see more business interaction between the two countries,” he added.

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The article was originally published in Business World and written by Alyssa Nicole O. Tan and Revin Mikhael D. Ochave.

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