Players in a Foreign Investment

The project assigned to us by our partner organization involves a foreign company setting up its factory here in the Philippines and in the process have caused a change in the lifestyle of the locals living around.  The putting up of this factory and conducting business in that area have produced both positive and negative externalities. With this issue, I became curious about existing laws and policies governing business and investments. What might have incentivized the foreign company to invest in the Philippines? What other facets should we look into in evaluating an investment like this?

My professor in one of my economics subjects was very kind to guide me in conducting the research. There are three parties involved in this issue, the foreign company, the local community, and the government. On the part of the foreign company, their business plans, form of ownership, annual report and financial returns, activities for expansion, and target market are particular areas of interest. The company also has a corporate social responsibility to the community it interacts with, so how does the company fulfill this obligation?  On the government side, their arrangement with the foreign investor regarding taxes, such as the existence of a tax holiday, is to be considered.

 Another aspect of this issue that is important but oftentimes might be taken for granted in conducting business is the ethics part. Are the rights and liberties of the local community encroached by the foreign company’s actions? Properly delineated property rights and each one’s maximization of utility now come into play.

Doing this research has helped me think critically and evaluate objectively using what I have learned so far in our economics subjects and consider also the compliance of certain business activities to our laws. 

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