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BSP sees increase in foreign investments in ’13

Prospects of credit rating upgrade get fund managers’ attention


The Bangko Sentral ng Pilipinas has expressed optimism that foreign direct investments will increase in 2013, citing the country’s improving macroeconomic fundamentals and prospects of an upgrade in its credit rating.

“We are quite optimistic about FDIs due to reports by investment promotion agencies on interest among foreign firms to relocate to the Philippines or expand their existing operations in the country,” BSP Governor Diwa Guinigundo told reporters.

Guinigundo said the Board of Investments and the Philippine Economic Zone Authorities, the two agencies tasked with soliciting FDIs, had said in their reports to the central bank that quite a number of foreign firms from various industries had signified their desire to put up operations in the country.

Without naming the companies, Guinigundo said the firms wanting to do business in the Philippines were engaged in power, electronics and business process outsourcing.

He attributed this interest to favorable economic fundamentals, such as high economic growth and benign inflation.

The economy grew by 6.5 percent in the first three quarters from a year ago, one of the fastest growth rates in Asia for the period.

Inflation averaged at 3.2 percent in the first 11 months, which was at the low end of the full-year target of 3 to 5 percent.

The BSP official likewise cited the good quality of labor services in the country.

“Besides the fact that wages here are lower, businesses also observe that Filipino labor is more productive and more efficient, and thus providing more value for investments,” Guinigundo said in a briefing.

Expectations of an upgrade in the country’s credit rating to investment grade by 2013 also helped improve the outlook on FDIs.

The Philippines is now rated just one notch below investment grade by all three major international credit rating firms, following ratings upgrades over the past two years. The credit watchdogs cited the country’s growing economy, its rising reserves of foreign exchange, and the government’s improving fiscal condition as some of the factors behind the recent upgrades.

Philippine economic officials have been pitching for an investment grade for the Philippines, saying its macroeconomic indicators are already at par with those already enjoying investment grades.

They said an investment grade may help the country attract much more FDIs than it had been getting over the years.

Economists said the country needed more job-generating FDIs so that the growth of the economy would translate into jobs and thus help reduce the number of poor households in the country.

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Tags: BSP , Business , Credit rating , foreign investments

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