Gov’t urged to step up efforts to attract FDIs
MANILA, Philippines—The Philippine government should sustain its push to attract more lasting and job-creating investments from overseas to allow the country to catch up with its richer neighbors.
In a commentary this week, Metropolitan Bank & Trust Co. noted that the Philippines had lagged behind its major Southeast Asian neighbors for the last 12 years in terms of getting foreign direct investments.
“The robust inflow of foreign investment has been supporting the growth in other Asian economies—generating much-needed employment, raising incomes, increasing economic activity, and deepening technologies,” Metrobank research analyst Pauline Revillas said.
She said that from 2000 to 2012, the Philippines received an average of $1.55 billion in FDIs yearly. This was much lower than the $6.2 billion average for Indonesia, Malaysia’s $5.88 billion, Thailand’s $7.22 billion, and Vietnam’s $4.54 billion.
The main drag to the country’s ability to convince foreign businesses to set up shop in the country, Metrobank said, had been its poor infrastructure.
“The government has been firm in its commitment to improve and develop the country’s infrastructure system,” the bank said.
“The remarkable expansion in investment spending has been a major push to GDP growth in 2013 which, if sustained, would lay the foundation for a more sustainable and inclusive growth moving forward,” it added.
Latest data showed FDIs rose by 55 percent year on year in November 2013 to $286 million. This brought the first nine-month figure to $3.6 billion.
Despite the increase, FDIs were still lower than foreign portfolio investment flows, with the latter registering a $4.2-billion net inflow in 2013.
Foreign portfolio investments, or “hot money,” are placements in securities such as stocks, bonds and government IOUs. These are indicative of the world’s confidence in the prospects of the domestic economy, but FDIs are seen as more long-term bets on the country’s growth.
“The need for higher FDIs cannot be further emphasized especially when we look at the annual figures of our Southeast Asian peers,” Metrobank said.
