ADB: Chinese investment pledges in PH surged in ’18
The Philippines enjoyed a surge in Chinese investment pledges last year while it also benefited slightly in the area of trade amid tensions between the United States and China, according to the Asian Development Bank (ADB).
“Increased [foreign investment] commitments in Indonesia, the Philippines and Malaysia are worth noting. These countries experienced significant growth in inward investment, largely owing to higher greenfield FDIs (foreign direct investments),” the Manila-based lender said in its latest Asian Integration Report 2019/2020 released on Wednesday.
“FDIs also more than quadrupled in the Philippines, with an influx of investments from China in the metals industry ($7.9 billion) and from Thailand in the hotels and tourism industry ($3.1 billion),” it added.
“Hesteel Group invested $4.4 billion in December 2018, while a project from the Panhua Group generated $3.5 billion in June 2018,” the ADB said.
Data compiled by the ADB showed that foreign-led greenfield projects as well as mergers and acquisitions of foreign firms in the Philippines last year jumped 348 percent to $22.4 billion from $5 billion in 2017.
The greenfield FDIs poured into the Philippines last year created 53,500 in new employment, up 43.2 percent from the 37,400 jobs generated in 2017, ADB calculations showed.
While the Philippines received a boost in FDIs from China last year, it also partly benefited from the US-China trade war.
For instance, in the case of US transmission apparatus imports from China, “some US imports moved to Mexico, some to EU countries (Germany, France and Belgium), and some to Asian countries (Thailand, the Philippines, Vietnam and Malaysia),” the ADB noted.
“Nonetheless, this trade shift generated only around $68 million and was unable to offset the decline from China. China, on the other hand, diverted its exports to other countries such as Mexico, Brazil, the Russian Federation, some EU countries, Japan, the Philippines and Myanmar,” the ADB added.
In the case of soybeans, “some Asian countries—Bangladesh, Indonesia, Japan, Malaysia, Pakistan, the Philippines, the Republic of Korea, Thailand and Vietnam—also benefited from the reallocation of US soybean exports,” the ADB said, adding that these countries “received a combined share to US total soybean exports of 26.2 percent in the second half of 2018, an increase from 17.1 percent in the second half of 2017 (equivalent to $584 million).”
The ADB said the United States had also diverted its cotton exports to Asian countries, including the Philippines, while China hiked imports of automobile parts from the Philippines, Armenia, Hong Kong, India and Singapore.
But the ADB cautioned: “Although trade diversion or the redirection effect could benefit some Asian economies, there is no guarantee the benefits would be sustainable in the long run.”
“Furthermore, if uncertainties surrounding international trade persist and continue to dampen business and investment confidence, there could be a significantly negative impact on global economic growth and international trade,” it added.
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.