EXECUTIVE SUMMARY
In a recent statement regarding the Trade Policy Review of the Philippines, delivered by Ambassador María Martin-Prat, the European Union (EU) acknowledged the Philippines’ recent reforms and their potential to further integrate the country into regional and global value chains. These include amendments to the Foreign Investments Act, the Public Service Act, and the Retail Trade Liberalization Act, as well as the creation of Green Lanes for Strategic Investments.
The EU stated that “longstanding challenges affecting the investment climate, including regulatory and administrative complexity” continue to affect foreign investment and participation in some sectors, even though the Philippines has implemented significant reforms to attract foreign capital. Vietnam, the Philippines’ Southeast Asian neighbour, offers a useful comparison because its recent reforms have focused on reducing specific barriers at the investment-entry stage, including the number of prior approvals and administrative requirements for qualifying projects. Examining Vietnam’s approach may provide the Philippines with lessons for designing and implementing reforms that reduce administrative friction and make investment procedures more predictable.
INTRODUCTION
The European Union’s de-risking strategy primarily seeks to reduce critical dependencies on single-country supply chains, such as those centred on China, without resorting to complete economic isolation or decoupling. As a result, the Association of Southeast Asian Nations (ASEAN) emerged as a leading alternative location for manufacturing and raw-material diversification and, according to the European Council, is the EU’s third-largest trading partner outside Europe.
The Philippines is looking to expand its economic ties with the EU through negotiations for a comprehensive free trade agreement (FTA), which could improve market access, investment, and supply-chain connections. Although the EU acknowledges the Philippines’ dedication to an open and predictable trading environment, its ongoing participation in the multilateral trading system and its active participation in the WTO, it also raises administrative and regulatory issues.
Vietnam offers us a healthy comparison. The country has become a significant hub for manufacturing within global value chains and a popular destination for foreign direct investment. As the Philippines looks to draw in investment from countries diversifying their supply chains away from China, Vietnam’s experience is especially pertinent. Instead of attempting to compare the overall investment performance of Vietnam and the Philippines, this brief concentrates on the variations in investment facilitation and regulatory implementation.
DISCUSSION / ANALYSIS
What can be learned from Vietnam’s approach?
Reducing the number of administrative steps investors must take before starting or growing operations has been a key focus of Vietnam’s recent investment reforms. Decree 19/2025/ND-CP, introduced in 2025, established special investment procedures for qualifying projects in designated industrial, economic, and technology zones and high-tech parks. Instead of going through all the steps of procedures under the standard investment regime, the framework permits qualified investors to use a streamlined registration process by submitting specific commitments about construction, environmental, and fire safety requirements. The new Investment Law introduced in December 2025 reduced the scope of projects requiring prior investment approval and, in some circumstances, permits foreign investors to establish an economic organization prior to obtaining an Investment Registration Certificate, according to the OECD’s 2026 FDI Qualities Review of Vietnam. The goal of these modifications is to make it easier to establish operations in Vietnam and to reduce entry barriers.
This implies that Vietnam’s strategy aims to reduce certain administrative steps while ensuring that reforms can be applied consistently in practice, rather than merely introducing investor-friendly regulations. However, the OECD does point out that the implementation of these reforms, including the creation of precise secondary regulations and adequate administrative capacity, will determine their efficacy.
Deepening integration with the European market has also coincided with Vietnam’s regulatory reforms. Bilateral trade has increased six years after the EU-Vietnam Free Trade Agreement (EVFTA) went into effect in 2020, and European companies have more confidence in Vietnam as a hub for regional trade and investment. Vietnam was cited by 55% of European businesses surveyed in EuroCham’s second-quarter 2026 Business Confidence Index as a key growth market or core business hub, and by another 22% as a crucial component of their regional operations. As a result, the EVFTA offers Vietnam a significant complementary advantage in addition to lowering some investment entry barriers; it is doing so within a pre-existing framework of preferential access to the European market.
Vietnam’s experience does not imply that investment location is solely determined by regulatory reform. Instead, it shows how important it is to address particular administrative bottlenecks in addition to more extensive trade and investment integration. This offers a helpful standard for evaluating whether recent reforms in the Philippines are effectively addressing comparable limitations. Therefore, rather than completely copying Vietnam’s regulatory framework, the Philippines should focus on identifying and eliminating the particular administrative bottlenecks that may increase the cost or uncertainty of investment entry and project execution.
Where does the Philippines differ?
The Philippines still has administrative and regulatory obstacles that can make starting and growing businesses more expensive and time-consuming. These include difficult coordination between national agencies and local governments, protracted permitting procedures, and overlapping requirements across government agencies. Although the government has implemented reforms aimed at removing these obstacles, it remains unclear whether these actions consistently result in project implementation that is quicker and more predictable. Nonetheless, the Philippines has implemented several reforms meant to lower obstacles to investment. Executive Order No. 18 is most directly related to administrative bottlenecks, creating Green Lanes for Strategic Investments to speed up licenses, permits, and other government approvals through a coordinated process involving local and national government entities. Different aspects of investment competitiveness are addressed by other reforms: the Investors’ Lease Act (RA 12252) permits eligible foreign investors to lease private land for up to 99 years, while the CREATE MORE Act (RA 12066) changed the corporate tax and investment incentive regime. Additionally, electronic tax filing, payment, and invoicing methods have been expanded by the Ease of Paying Taxes Act (RA 11976).
These changes demonstrate how the Philippines acknowledges many of the obstacles to investment facilitation found in international evaluations. Whether they are being applied consistently enough to lessen the uncertainty and administrative delays that investors actually face remains to be seen. When contrasting the Philippines with Vietnam, it is especially crucial to understand the difference between reform on paper and its actual implementation. The Philippines’ Green Lane system aims to coordinate approvals across several agencies, while Vietnam’s recent reforms have attempted to eliminate certain requirements at the investment-entry stage. Therefore, the efficacy of the Philippines’ approach depends not only on the presence of a fast-track mechanism but also on agencies’ ability to regularly adhere to the deadlines and coordination standards it sets.
Recent implementation data also suggests why execution deserves closer attention. As of March 2026, the Board of Investments reported 244 Green Lane-certified projects representing approximately ₱6.43 trillion in investments, while 171 projects worth around ₱5.79 trillion remained in the pre-development stage. These figures do not by themselves establish that the Green Lane mechanism is ineffective, but they highlight the importance of monitoring whether accelerated approval mechanisms translate into timely project implementation.
POLICY RECOMMENDATIONS
- Measure investment facilitation beyond approval: Track approval and permitting times, customs clearance, investor complaints and delays between project certification and actual implementation to assess whether reforms are reducing administrative friction in practice.
- Strengthen inter-agency coordination: Expand the Green Lane approach by clearly defining agency responsibilities, processing timelines and escalation mechanisms for strategic investments that require multiple government approvals.
- Target specific administrative bottlenecks: Rather than introducing additional broad investment incentives, identify and eliminate duplicated documentation, approval requirements and procedures that delay investment entry and project implementation.
- Use the EU–Philippines FTA to strengthen regulatory cooperation: Incorporate investment facilitation, customs cooperation, regulatory transparency and standards cooperation into negotiations to make the Philippines a more predictable destination for European investors.
- Shift from investment attraction to investment execution: Ensure that existing incentives and facilitation mechanisms remain accessible throughout the investment cycle, from initial approval through construction and commercial operation.
CONCLUSION
EU investment decisions are unlikely to be determined solely by foreign countries’ investment incentives. While the Philippines has already implemented several initiatives meant to enhance its investment environment, Vietnam’s recent reforms highlight the importance of focusing on particular administrative obstacles to investment entry. Therefore, ensuring that reforms like the Green Lane system result in predictable approval processes and timely project execution is the Philippines’ key challenge. The Philippines’ capacity to secure a larger portion of EU investment as companies diversify their supply chains and investments throughout Southeast Asia will rely not only on its incentives but also on how well investors are able to navigate the regulatory framework from initial application to project implementation.
The Philippines has made considerable progress on investment policy, but its competitiveness in the EU will increasingly depend on whether these reforms translate into measurable improvements in the time and predictability of project implementation. Vietnam is a useful case study as its recent reforms have focused on lowering specific entry barriers: high utility costs, complicated permitting procedures, and infrastructure bottlenecks, rather than solely relying on tax incentives.
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