Net inflows of foreign direct investments likely hit a new record in 2018, according to Finance Secretary Carlos Dominguez III.
“We are confident the full-year FDI level can reach or even exceed the previous record high,” Dominguez said during the UP Women Lawyers Circle Business Conference at the University of the Philippines-Bonifacio Global City Auditorium in Taguig City.
Data showed net foreign direct investments in the first 11 months of 2018 hit $9.1 billion, or $900 million short of the $10-billion net inflow registered in 2017. It was 3.2 percent lower than $9.4 billion recorded in the first 11 months of 2017.
The lower net inflows were attributed to the 28.3-percent decline in net investments of equity capital, which reached $2.1 billion in the first eleven months of 2018.
Equity capital placements in the 11-month period mostly came from Singapore, Hong Kong, the United States, Japan and China. These were invested in manufacturing, financial and insurance, real estate, arts, entertainment and recreation, and electricity, gas, steam and air-conditioning supply activities.
Net investments in debt instruments grew 9.3 percent to reach $6.2 billion from $5.7 billion in the same period in 2018. Reinvestment of earnings also increased 2.8 percent to $738 million.
Data showed that in November, net inflows fell 46 percent to $531 million from $982 million a year ago, with the drop in net investments in debt instruments.
The Bangko Sentral ng Pilipinas is scheduled to release the full-year data on foreign direct investments Monday.
Meanwhile, Dominguez said the government had the fiscal space to pursue an ambitious infrastructure program as shown by the manageable debt level and the country’s sound credit ratings.
Debt-to-GDP ratio continued its downward trend to 41.9 percent in 2018 from 68.5 percent in 2005, and is expected to further decrease to 38.6 percent by 2022.
“International confidence is seen in the willingness of our development partners and foreign governments to help finance the large infrastructure projects,” Dominguez said.
Dominguez cited a number of positive factors in his presentation. These factors include the passage and implementation of reform measures such as the Ease of Doing Business Act, National ID System, Personal Property Security Act, the law upgrading the Corporation Code, an act strengthening the Bangko Sentral ng Pilipinas, Universal Health Care Act and a law shifting rice trading to a tariff regime.
Dominguez also expressed optimism over the passage and implementation of the remaining tax reform packages.
“The tax reform packages will bring us a more modern tax system conducive to investments. It will raise revenues to fund our infrastructure and social development programs. It will bring our tax effort to levels compatible with the most dynamic economies of the region,” Dominguez said.