The National Economic and Development Authority has expressed optimism that the country will soon start catching up with its Southeast Asian neighbors in terms of foreign direct investments.
Neda Director General Arsenio Balisacan said the substantial rise in investments by domestic companies augured well for the country’s efforts to corner more FDIs.
He said rising local investments, an indicator of confidence of domestic firms, was a prerequisite for boosting FDIs.
“In the recent past, even domestic firms were not investing much, so it was difficult to expect more investments from foreign firms,” Balisacan said.
“But now, local companies are finally investing more significantly and this may help attract foreign firms into investing more in the country,” he added.
The Philippines has been a laggard among emerging Asian economies in the area of FDIs. Last year, the country’s about $2 billion in FDIs paled in comparison with Indonesia’s more than $20 billion.
This was despite the Philippines’ favorable macroeconomic indicators, including a robust growth that made it one of the fastest growing Asian economies together with China.
The country grew by 6.8 percent last year, surpassing the official target of 5 to 6 percent.
Balisacan, however, said the country could not expect FDI inflows to match those infused into other Asean countries in the near future. He said substantial growth in FDIs could not happen overnight.
He noted that other emerging Asian economies that were getting more FDIs were those that had been registering robust growth rates for at least a decade.
In the case of the Philippines, he noted, it was only last year that it started registering a rapid economic growth. Prior to last year, the economy was growing by an average of about 5 percent a year.
“We have to sustain the robust growth that we have posted recently to establish credibility,” Balisacan said.
In the first half of the year, the Philippine economy expanded by 7.6 percent. This growth rate, which was partly driven by domestic investments, was the same as China’s and was the fastest in Asia during the period.
Investments in fixed capital formation, including construction and durable equipment, grew by 16.8 percent in the first quarter, faster than the 2.8 percent registered in the same period last year.
In the second quarter, investments in the same rose by 9.7 percent, faster than the 8.7 percent a year ago.