MANILA, Philippines—The Philippines inched up three notches to 96th of 141 economies as a recipient of foreign direct investment in 2007 from 109th in 2005 and 99th in 2006, according to the World Investment Report 2008 of the United Nations Conference on Trade and Development (UNCTAD).

As a source of foreign direct investment, the Philippines rose in ranking to 49th last year from 59th in 2005 and 67th in 2006.

The report acknowledged efforts of governments to improve investor confidence — especially in Southeast Asia — but warned that the global financial crisis had begun to impact on cross-border investment activities.

UN Secretary-General Ban Ki-moon said developing and transition economies last year attracted more flows than ever, reaching nearly $600 billion, 25 percent more than in 2006 and accounting for one-third of the global total.

“While global foreign direct investment flows are projected to decline this year, those to developing and transition economies are expected to suffer less, despite the current financial and credit crisis,” Ban said.

The 411-page report, the 18th of an annual series, examined the ways, extent and conditions under which transnational corporations could contribute to meeting the needs of developing economies to build necessary infrastructure.

Ban cautioned against unrealistic expectations about the contribution of transnational corporations to an economy’s progress. “Companies will only invest in infrastructure projects that can assure adequate returns for commensurate risks,” he said.

“It has proven difficult for countries with small economies and weak governance systems to attract transnational corporations into infrastructure,” he added.

Ban said the challenge to government policymaking was to create the appropriate conditions to facilitate investments that can contribute to poverty alleviation and accelerated development.

The report’s highlights on the Philippines included having the beverage and food conglomerate San Miguel Corp. among the top 100 non-financial transnational corporations(TNCs) in developing economies.

Based on 2006 data, San Miguel ranked 60th in terms of foreign assets, with $2.44 billion; 81st in employment with 4,000, or 29 percent of total employees, engaged overseas; and 67th in spread of operations, with 31.6 percent of affiliates based abroad.

The port operator International Container Terminal Services Inc. was among the 50 top infrastructure TNCs in developing economies in terms of foreign assets, with $287 million of its total assets of $385 million invested overseas.

Included on a 2007 list of cross-border mergers-and-acquisitions transactions worth over $3.0 billion was a $3.4-billion deal between American firm Mirant Corp. and a Japanese group.

A related report, titled the World Investment Prospects Survey 2008-2010, showed that Southeast Asia — along with South and East Asia — remained as the top preferred region for investments.

Among the factors that attract foreign direct investment to the region are market growth, availability of cheap labor, buoyant economic growth prospects, further regional integration, and noticeable improvements in the business environment for foreign companies, the report said.

Last month, Cesar Bautista, co-chairperson of the government-private sector National Competitiveness Council, said the Philippines might return to being among the top one-third of the world’s economies in two years, particularly if efforts to create a favorable environment for business continued.

Bautista said the council NCC aimed to attract in two years investments that would drive exports to a 30-percent growth in earnings and the overall economy, as measured by the gross domestic product, to a 4.0-percent growth. Edited by INQUIRER.net

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