(AFP) Visiting Philippines President Gloria Arroyo today pitched for local investment to boost her country's weak economy but local businessmen pointed to poor security in the Philippines as a major obstacle.

Arroyo, who arrived yesterday, has held a string of meetings with business leaders in which she tried to allay their security concerns and promised new attractive investment policies.

The president later witnessed the signing of 11 agreements and memoranda of understanding between businesses from both countries in the energy, semiconductor and trade sectors.

Abdul Rafique Karim, deputy president of the Malay Chamber of Commerce said security ranked top amongst the concerns of Malaysian businesses during a meeting with Arroyo.

"It is one of the utmost concerns for businessmen who want to invest, especially in Southern Philippines," he told reporters.

Abdul Rafique said another issue raised was the need to cut red tape for businesses setting up in the Philippines.

"The chamber has identified palm oil plantations and food production in the Philippines with investment potential," he said.

Uncertainties

Abdul Rafique said the level of Malaysian investment was "quite low" because of the uncertainties.

"We cannot ignore the huge Philippines market with the coming of ASEAN Free Trade Area (AFTA).

"It will take time before we can see investments flowing. We are looking at the (security and policy) developments," he said.

A quarter of local exports now go to markets in the Association of Southeast Asian Nations (ASEAN) and around 20 percent to the US.

Under AFTA, which has a market of half a billion people, ASEAN's six original members -- Malaysia, Thailand, Indonesia, Brunei, the Philippines and Singapore -- must cut import tariffs to a maximum five percent by January 2003.

The less developed members of ASEAN -- Laos, Cambodia, Myanmar and Vietnam -- have been given longer.

Abdul Rahman Maidin, president of the Malay business group, said Arroyo gave them an assurance that security would be improved.

"Her assurance is comforting," he said.

Abdul Rahman said Arroyo said that Manila would open 160,000 hectares of land in Southern Philippines for palm oil cultivation.

Attractive incentives

David Chua, deputy secretary general of Malaysia's influential Associated Chinese Chambers of Commerce and Industry, said the issue of security was being addressed by Manila.

"Businessmen will look at the opportunity and at the same time they will have to weigh against the risk factor.

But Chua added with land and labour available at a low cost, local investors would do business in the Philippines if the incentives were attractive enough.

"It will in due time attract investors. The government is paying serious attention to it (security)," he said.

Benjamin Chua, president of the Filipino-Chinese Chambers of Commerce and Industry, described the talks as productive.

"The president identified areas Philippines is promoting for foreign investments -- palmoil plantation, computers and tourism," he said.