RP's foreign investments plunge 83.5% in Q1
By Karen Flores, abs-cbnNEWS.com | 06/10/2009 7:46 PM
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The Philippines continues to be unlucky in closing investment deals with foreigners, getting only $44 million in foreign direct investment (FDI) inflows for the first three months of 2009.
According to the Bangko Sentral ng Pilipinas (BSP), the latest figure is a huge 83.5-percent drop from $266 million recorded in the same period last year. In 2007, the country managed to attract $1.6 billion in FDIs for the three-month period.
"Contributing to the first quarter inflows were the positive balances registered in equity capital and reinvested earnings, which more than offset the net outflow in other capital," BSP said in a statement.
While foreign businessmen continued to be cautious of making investments in the country, the Philippines still received $47 million in equity capital for the first quarter, lower by 79.4 percent compared to the 2008 level. These went to manufacturing, real estate, financial intermediation, and trade and commerce sectors, mostly by investors from Japan and the United States.
Reinvested earnings, on the other hand, reached $47 million, a reversal from the $240-million net outflow recorded in the same period last year.
"Investors opted to retain earnings and profits in local banks and enterprises as the country showed signs of stabilization in the midst of the global financial crisis and the economic downturn," BSP said.
The BSP is expecting FDIs to reach $700 million by the end of the year as foreign businessmen hold back their plans to invest in the Philippines amid the global economic crisis.
Last year, the country attracted $1.4 billion in FDIs, with most funds going to the power and telecommunications sectors.
RP needs more FDIs
Earlier, the Joint Foreign Chambers of the Philippines (JFC) identified FDIs as a key driver for the country's recovery from the economic crisis, laying out concrete steps to improve the country's business environment.
Such measures include the reduction of barriers to foreign participation, more forceful action against corruption and smuggling, the creation of more modern infrastructure, and improvements in the country's education system, among others.
"As foreign investors and employers, we fully share the ambition of Filipinos for the country to become an advanced economy in the decades ahead. Our members are prepared to invest continuously and heavily and to create millions of new jobs, but only if the nation can create a better business climate which will enable future prosperity," the seven-member chamber said in its report.
According to JFC, the Philippines has several sectors which offer great potential to create millions of new jobs and billions of dollars in direct and indirect revenues.
These, they said, include the agri-industrial sector, the business process outsourcing sector, creative industries (film, design, music), infrastructure and logistics, manufacturing, mining, and tourism.
"The next two years will be an ideal time to introduce reforms to accelerate the growth of these seven sectors," JFC said.
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