Why PH lags in FDI among ASEAN countries

https://ph.news.yahoo.com/feature-why-ph-lags-fdi-among-asean-countries-164817100.html

Manila— Economic watchers might question why the Philippines has not yet attracted a large amount of foreign direct investments (FDIs) as significant as other Southeast Asian neighbors did in the past few years despite being one of the fastest growing economies in Asia. The National Economic and Development Authority (NEDA) chief has an explanation for this.

NEDA Director General Arsenio M. Baliscan said in an interview that it is not really surprising why the Philippines is still lagging in FDI inflows compared to Indonesia, Malaysia, Thailand, Singapore, and Vietnam as these countries have created economic confidence among foreign investors with their consistent economic growth.

Balisacan, who is also the socioeconomic planning secretary, said the aforementioned ASEAN neighbors have consistently grown their Gross Domestic Product (GDP) at an average of 6.0 to 8.0 percent for the past 25 to 40 years.

“If you look at the past 30 years, these countries have consistently been growing at a rate of 6.0, 7.0, 8.0 percent annually. But when does the Philippines start this kind of growth? Just these last three years,” he said.

He said that the country’s GDP growth before President Benigno S. Aquino III only reached about 4.5 percent but Philippine GDP growth in the last three years was averaging 6.0 percent.

“It is not surprising that initially our FDIs are low compare to these countries. They have been growing enough, they become magnets for FDI,” he said.

He also noted other factors which foreign investors consider in investing in a particular country.

“It is not only lack of capital that is determining foreign investments but it is also about the complimentary factors that would make that capital productive: infrastructure, institution, bureaucracy, labor policies. It’s really about the ease of doing business, the cost of doing business in the country,” Balisacan said.

He added that foreign investors will not consider investing in a country, even if capitalization is still low, if risks of power shortage, inadequate infrastructure, and corruption among others are high.

“These will reduce the productivity of capital, the profitability, and earnings,” he said.

Balisacan noted that if the Philippines aims to join the ranks of other ASEAN-member states, the country must sustain longer its economic growth.

“Make sure that your growth is sustainable. Just keep growing. Eventually, you will attract more and more of those FDIs as they gain confidence in you,” he said.

“It’s not what we are doing is not attracting FDI. They will come; you just have to continue getting our house in order,” the NEDA chief added.

Data from ASEAN Foreign Direct Investment Statistics Database showed that the Philippines ranked fifth among 10 member-states of ASEAN with highest net inflow in 2013 with FDI amounting to $3.86 billion.

Singapore attracted FDIs amounting to $60.64 billion, followed by Indonesia with $18.44 billion, Thailand with $13 billion, Malaysia with $12.3 billion, and Vietnam with $8.9 billion.

Attracted FDI amount of the Philippines is higher than Cambodia’s $1.27 billion, Brunei Darussalam’s $908.4 million, and Laos’ $426.7 million.

Myanmar showed no FDI data for last year.

In 2012, Singapore was the FDI magnet among Southeast Asian countries with foreign capital inflow of $59.81 billion.

Next to Singapore then was Indonesia with FDI amount of $19.14 billion; Thailand with $10.7 billion; Malaysia with $9.4 billion; Vietnam with $8.37 billion; the Philippines with $2.8 billion; Cambodia with $1.56 billion; Myanmar with $1.15 billion; Brunei Darussalam with $864.8 million; and Laos with $294.4 million.

For 2012 and 2013, the Philippines ranked fifth with highest FDI inflow; a notch higher from its sixth place in 2011 with FDI amount of $1.82 billion.

The country’s FDI then was higher than Brunei Darussalam’s USD 1.21 billion, Cambodia’s USD 891.7 million, and Laos’ USD 466.8 million.

FDI of Myanmar in 2011 is higher than the Philippines at USD 2.06 billion.

Comments

  • kel1guykel1guy Member PExer
    He added that foreign investors will not consider investing in a country, even if capitalization is still low, if risks of power shortage, inadequate infrastructure, and corruption among others are high.

    Noted above... Additionally no one is going to invest long term when a 100 percent capital investment only gets nets you a 40 percent ownership of that investment and no majority vote for that investment.

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