The country’s investment rate rose slightly in 2012 as the favorable performance of the economy improved investor sentiment and encouraged firms to do more business here.
Data from the Philippine Institute for Development Studies (PIDS) showed that the investment rate, or the value of investments in proportion to the country’s gross domestic product (GDP), grew to 19.7 percent last year from 19.1 percent in 2011.
Economic officials partly credited the increase in investments to encouraging macroeconomic fundamentals, including modest inflation, high GDP growth, declining debt burden of the government, rising resources of the banking sector and the country’s growing foreign-exchange reserves.
Market expectations that favorable fundamentals will be sustained and the anti-corruption campaign of the Aquino administration also enhanced business confidence, they said.
“There are fundamental reasons to believe that continued macroeconomic discipline and reforms can push the growth trajectory further to a path that will allow the economy to not only survive the global headwinds but to adapt and to thrive in a more challenging operating environment,” BSP Governor Amando Tetangco Jr. said the Tuesday in an economic forum.
However, even with the growth in the country’s investment rate, the Philippines remained far behind many of its neighbors in terms of investments.
PIDS head Josef Yap said in another forum on Wednesday that the Philippines had yet to see the high investment rates it used to enjoy prior to the Asian financial crisis.
In a presentation, Yap said the Philippines’ investment rate was low compared to Malaysia’s 24 percent, South Korea’s 29 percent, and Indonesia’s 33 percent.
Yap said private firms should take advantage of income opportunities by investing more.
“Our private sector is quite disappointing. Why are they not betting on the Philippines more?” Yap asked during the forum.
Economists said among the advantages of the Philippines were its large pool of young workers and its growing population. They said investors would find it easy to meet their labor requirements here. At the same time, they will have a huge market for their goods and services.
However, economists also said constraints to investments remained. These include tedious processes for setting up a business, inadequate infrastructure and high power cost.—Michelle V. Remo