Declining US investments won’t affect BPOs-Pernia

Despite President Duterte’s “cutting” ties with the United States, business process outsourcing (BPO) firms mostly serving the United States are expected to adopt a business as usual stance, although as American investments in the country may decline, according to the country’s chief economist.

“I think the FDI [foreign direct investment] from the US has gone down. There are already reports, although China’s FDI [in the Philippines] is picking up. US FDI [in the country] has been on a downtrend,” Socioeconomic Planning Secretary Ernesto Pernia told reporters on Thursday.

As the Philippines pivots to China, the government nonetheless will ensure that potential investors from the mainland are not corrupt to avoid repeats of controversial deals in the past, such as the NBN-ZTE and the North Rail, said Pernia, also the director general of the National Economic and Development Authority (Neda).

Latest Bangko Sentral ng Pilipinas data showed that investor confidence spilled over into the first month of the Duterte administration, as the country recorded a higher net FDI inflow of $503 million in July, during which the United States was among the top sources of inflows.

Despite expectations of higher FDI flows from China, Pernia said these could not compensate for a decline in US investments in job-generating projects.

“Chinese FDI came from a low base, while the US came from a much higher base,” he noted.

The Neda chief expressed optimism there would be no sharp drops in FDI from the United States, as American investors had been reassured that they could continue doing business here.

In the case of BPO companies, “they would not pull out,” he said.

“I don’t think there will be a pullout of BPOs except if [Republican Party candidate Donald] Trump wins, but that could likely happen next year. [BPO operations are] profitable to private sector businesses. The US government cannot compel the private sector” to stop operations in the Philippines, he said.

The BPO industry expects to generate $25 billion in revenue and employ 1.3 million this year. Over the next six years, the industry is looking to double these numbers.