SENATE Minority Leader Franklin M. Drilon expressed serious concerns over the capability of the government to attract new foreign investments.
Drilon raised this as it was revealed during the Senate hearing on the proposed budget of the National Economic and Development Authority that new investment in the first half of 2017 plunged 90.3 percent from the same period in 2016.
Latest Foreign Direct Investment shows a significant deceleration in the influx of new investments, according to Drilon, citing data from the Bangko Sentral ng Pilipinas, which showed that foreign equity placements other than reinvestments of earnings decreased by 90.3 percent during the first six months of 2017 ($141 million) vis-à-vis the same period in 2016 ($1.448 billion).
“We note from the reports that there is a deceleration in new investment. This is very alarming. Why such a huge drop? Is this an indication of anything?” Drilon asked.
The minority leader said that the Neda has a lot to explain about this huge drop in new foreign investments, saying this is “reflective of confidence of foreign business on our country.”
“If we are to attract new foreign investment, then it is about time that we take a serious look at how things are going on in our country, because new investment would not come in unless we are able to raise the investors’ confidence level on our country,” Drilon said.
Citing a study conducted by The 2018 Asean Business Outlook Survey published by the American Chamber of Commerce in Singapore and the US Chamber of Commerce, Drilon said among the companies surveyed, only 22 percent chose the Philippines as a possible expansion location, with Vietnam topping the list (34percent). The Philippines ranked sixth lagging behind Vietnam, Myanmar (29percent), Indonesia (29percent) Thailand (26percent), and Cambodia (23percent).
Drilon said that foreign direct investment (FDIs) is critical to the country’s economic growth and contributes in providing job and business opportunities to Filipinos; hence the government should seriously consider this huge decline in FDIs.
Drilon pointed to the current political climate in the country as among the possible “stumbling blocks” that discourage foreign investors.
In response to Drilon’s questions regarding the huge drop in new investment, Senate Committee on Finance chairman Loren Legarda relayed Neda’s explanation that it was caused by some restrictions.
However, even Legarda admitted that she does not agree with the answer: “I am told that it is because of certain restrictions. I do not agree with that answer because these restrictions were already there when there was an increase.”
To which Drilon replied, “I admire your candor.”
“I am candid because I am very concerned. I cannot sugarcoat something because the figure would not lie,” Legarda responded, adding, “I cannot create answers if I am not supplied the justification for the decline in the foreign direct investment.”
Drilon also cautioned the government against the continued depreciation of the Philippine peso, while the other regional currencies have already started to appreciate against the US dollar.
During the budget debates, Drilon pointed out that the Philippine peso depreciated by an average of 6.5 percent from January to August of this year.
Drilon cited a forecast made by some analysts saying that Philippine peso could weaken to P52.50 to $1 by the end of 2017 and P53.54 by 2018.
“These are facts that are developing that we do hope can be addressed by the economic planners in the best way we can in order not to harm our economy,” Drilon said.