The Bangko Sentral ng Pilipinas said Thursday it expects net inflows of foreign direct investments this year to match the record $8-billion level registered in 2016, downplaying concerns of some quarters that the country was losing its ability to attract foreign businessmen.
The Bangko Sentral said in a statement the prospects for inward flows of FDIs into the country continued to be favorable as both “push” (subdued global economic growth) and “pull” (sustained robust macroeconomic performance and investment grade status) factors remained.
“The BSP expects the Philippines to sustain FDI inflows this year, close to the $8 billion level in 2016. These prospective FDIs are expected to be channeled mainly to the manufacturing sector (electronics and motor parts), which can help create employment and more growth opportunities,” it said.
“There is a huge potential in attracting further FDIs, which can put the country at par with the large levels of FDI seen in neighboring Asian countries. Such potential can be realized by reforming the rules on foreign ownership, addressing infrastructure gaps, and reducing the cost of doing business,” it said.
National Economic and Development Authority director-general and Economic Planning Secretary Ernesto Pernia, a member of the economic team, said Senator Franklin Drilon missed the facts on FDI when he “insisted” on his view about the status of foreign direct investments.
Drilon at the Senate plenary last Friday expressed concern over what he called “a significant deceleration in the influx of new investments,” particularly in the first half.
“Senator Drilon narrowly looks at so-called ‘new’ FDIs only. Fact it with reinvestments reckoned as well, drop in total FDIs was only 14 percent by the second quarter, not 90 percent. Reinvestments are just as good as expansion of operations does create employment multipliers too,” Pernia said.
“This is the standard method of measuring FDIs. But at the hearing on the Neda budget last Friday, Senator Drilon would have nothing of this and insisted on his view,” Pernia said.
Data showed that net inflows foreign direct investments declined 14 percent in the first half to $3.6 billion from $4.2 billion a year ago.
The Bangko Sentral, however, said net inflows in June alone grew 182.7 percent to $674 million from $238 million a year earlier.
FDI inflows declined in the first half, coming from a high baseline last year when Security Bank Corp. received a P37-billion capital infusion from Bank of Tokyo-Mitsubishi UFJ Ltd. as payment for a 20-percent stake in the bank. This was considered one of the biggest investments by a foreign financial institution in the Philippines.
FDI net inflows reached $7.9 billion in 2016, up by 40.7 percent from $5.72 billion in 2015.
Neda earlier made an assurance that foreign investors remained confident to do business in the country despite the 14-percent decline in FDI in the first half.
Full-year FDI data are expected to receive a boost from the recently concluded P64.5-billion deal between Energy Development Corp. and Philippines Renewable Energy Holdings Corp.
PREHC, a consortium of investors with funds managed by Macquarie Infrastructure and Real Assets and Arran Investment Pte. Ltd. of Singapore-based GIC, acquired 31.5 percent of EDC’s common shares, representing the largest voluntary tender offer made in Philippine history.