Manila, 23 July--Secretary Heherson Alvarez, vice-chairperson of the Climate Change Commission, said that developing countries like the Philippines must press on with making “deep and early cuts” in their greenhouse gas (GHG) emissions even as developed countries like the U.S. remain wishy-washy on the subject.

Alvarez made this statement last Thursday, 22 July, at the launch of the World Investment Report (WIR) of 2010 held at the NEDA sa Makati Building, in Makati City. The WIR, which is published annually by the United Nations Conference on Trade and Development (UNCTAD), cites an upward trend in foreign direct investment (FDI) in “low-carbon” businesses.

business areas, such as renewable energy, recycling, and manufacturing of products related to environmental technology.

“This bodes well for developing countries’ initiatives to mitigate and adapt to climate change,” read a statement from Supachai Panitchpakdi, UNCTAD Secretary-General.

Alvarez said that the Philippine Government should welcome the entry of investments in low-carbon sectors, but added that the problems wrought by climate change cannot be solved solely by climate change financing and superior technology that is being offered by developed countries.

“I have reservations about whether the private sector alone can manage [the issue of climate change], said Alvarez. “[What we need are] legislative tools and the rigor of democratic intervention.”

Alvarez said that the transfer of climate adaptation technology should be subsidized. He added that copyrights to such technology should be reduced to two years, from the present 15 years, for developing countries to meaningfully participate in reducing climate change. Without these concessions, the Philippines might end up “inordinately carrying the burden” of climate change financing and technology transfer, Alvarez warned.

Prof. Leonor Briones, of the National College of Public Administration and Governance (NCPAG) of the University of the Philippines, and who also presented a statement on the WIR 2010, agreed with Alvarez, saying that a policy of attracting climate change FDIs comes at a cost.

“There is increasing pressure on the country to compete with others for FDI, but let us think about what we are giving up,” said Briones.

Briones said that in 2009, the Philippine Government reportedly lost as much as P100 billion worth of tax revenues due to incentives and tax breaks to foreign investors.

“A regulatory framework needs to be put in place,” said Briones, “and this framework must come from the President.”

In his statement, UNCTAD Sec-Gen Supachai Panitchpakdi conceded that transnational corporations (TNCs) have been the major carbon emitters. However, “they can also be a source of low-carbon investment and new technology to tackle the problems attendant to climate change. They are therefore both part of the problem and the solution to climate change.”

The UNCTAD Sec-Gen also said that there are opportunities for developing countries that are able to attract low-carbon foreign investment and technology. These benefits include “strengthened productive capacities, enhanced export competitiveness, a contribution to global climate change mitigation and an acceleration of their own transition to a low-carbon economy."

The UNCTAD Sec-Gen added that policymakers need to maximize the benefits and minimize the risks of low-carbon foreign investment but acknowledged that this is not easy, since most developing countries have little experience in this area. He said that national strategies to promote low-carbon foreign investment and related technology dissemination need to be coordinated with climate change and investment policies at the international level. He recognized that “many developing countries lack financial resources and institutional capabilities to do this effectively, and thus, an international support structure is essential.”

Meanwhile, according to UNCTAD, global FDI flows have made a modest recovery in the first half of 2010, after bottoming out in the latter half of 2009. This suggests brighter FDI prospects in the short-term. UNCTAD estimates that global inflows are expected to increase to over US$1.2 trillion in 2012. However, despite the fact that FDI flows are recovering in the wake of a drastic decline in 2009, FDI prospects for 2010-2012 remain fraught with risks because of the fragility of the global economic recovery.

The launch of the World Investment Report of 2010 was jointly organized by UNCTAD, the UN Information Centre (UNIC) Manila, and the Philippine Institute of Development Studies (PIDS).

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