“The Marcos administration appears keen on getting more foreign investment to bankroll vital economic projects”
Not unexpectedly, foreign analysts looking at the Philippine economy from different perspectives would arrive at contrasting conclusions.
On one hand, there’s HSBC Global Research, which said recently the country’s reputation for attracting foreign direct investments (FDIs) is “turning for the better” due to continuing reforms and economic stability over the past decade.
The group observed the “bearish view” on the Philippines may be “dated” and perhaps “incommensurate” with what the country has recently achieved because of the administration’s “strong narrative of reform” and “a large sense of macroeconomic stability.”
HSBC said looking at FDI inflows relative to the size of the economy, the Philippines is, in fact, in the middle of the pack in ASEAN.
“FDI inflows may not be as robust as, say, Malaysia and Vietnam, but they are a sizable improvement from the sluggish inflows seen in the 1990s and the early 2000s.
This, we believe, should be enough evidence to show the country’s reputation [for] attracting FDI is, indeed, turning for the better.”
On the other hand, the California-based Milken Institute’s Global Opportunity Index (GOI) report for 2024 painted a dark picture of the Philippines as among the least attractive for foreign investors.
The economic think tank’s report measured the conduciveness of an economy to foreign direct investments based on macroeconomic fundamentals, business regulation, availability of financial services, and innovation.
The Philippines placed 91st out of 130 countries when it comes to attractiveness to foreign investors due in part to poor business perception and financial access.
The index showed the Philippines was only slightly better than other countries in developing Asia, beating only the likes of Bangladesh, Lao PDR, and Cambodia.
The group rated the Philippines poorly on business perception, financial services, and institutional framework, saying these are the main reasons that made the country a “less attractive” option to investors.
Our concern, however, is what’s happening at the ground level and what the current national leadership is doing to attract more foreign investments.
The Bangko Sentral ng Pilipinas reported recently that net inflows of foreign direct investments reached $8.9 billion in 2023.
While this represents a 6.6 percent decline from the $9.5-billion net inflows recorded in 2022, the agency said the country has sound economic fundamentals.
Net FDI inflows hit an all-time high of $10.5 billion in 2021 at the height of the pandemic.
Meanwhile, the government’s lead investment promotion agency reported that it has around P2 trillion worth of investments in its current pipeline, a volume that is more than enough to meet its target for this year.
The Department of Trade and Industry’s Board of Investments said recently these investments were spread out over 331 projects that had come in following the enactment of needed reforms.
“In pursuit of economic growth, the government has enacted a suite of major economic reforms to further enhance the investment climate and economic structure. These reforms include the Retail Trade Liberalization Act, as well as the amendments to the Foreign Investments Act,” it said.
In 2023, the BOI approved P1.26 trillion worth of investments, the highest in the government agency’s 56-year history.
These investments were mostly in the renewable sector, information and communications technology, mining, manufacturing and infrastructure.
The top sources by country include Germany, the Netherlands and Singapore.
For this year, the BOI is targeting at least P1.1 trillion worth of investments, with the government agency still expecting that most of these will be in the renewable energy sector.
And the Marcos administration appears keen on getting more foreign investment to bankroll vital economic projects.
In his recent working visit to Germany, for instance, President Marcos Jr. was able to secure total investment commitments amounting to $4 billion (about P220 billion) in key sectors such as health care, manufacturing, innovation, agriculture, and renewable energy.
The task now is for the various government agencies, led by the DTI, to convert investment pledges in the president’s foreign trips into actual projects that will boost economic growth in the years ahead.
As the President told investors during the 10th Asian Summit in Singapore in September 2023, the Philippines is now a prime investment destination and a nation on the rise, “ready to collaborate with partners who see our potential.” (Email: [email protected])