The American Chamber of Commerce of the Philippines (AmCham) has welcomed the record-high foreign direct investment (FDI) that the country posted in 2017.
In a statement Thursday, AmCham said the Philippines has attained a level of attracting FDIs close to its fast-growing member states of Association of Southeast Asian Nations (ASEAN) such as Malaysia, Indonesia, Thailand, Singapore, and Vietnam.
The Bangko Sentral ng Pilipinas early this week reported that net FDI in 2017 increased by 21 percent to USD10 billion.
“This is great progress from 2010 when we advocated an annual FDI target of USD7.5 billion after the year of 2009 when net FDI was USD2.04 billion,” AmCham said, noting that the last year’s FDI figure represents a 400-percent growth over 2009.
The business group is also optimistic that the country will be able to attract higher level of FDIs in the coming years as 60 percent of last year’s FDIs were comprised of “intercompany borrowings”, which means existing investors familiar with the country continue to expand their operations here.
“We expect this trend to continue so long as high GDP (gross domestic product) growth is maintained, and we hope that the 30 percent classified as ‘equity’ is going into new investments,” the group stated.
“The reforms being made by the government to reduce restrictions on foreign investment should attract new foreign investment in future years. Another reform that would support increased foreign investment would be the lifting of the six-year old moratorium on new mining production projects to allow responsible mining activity,” it added.
However, the AmCham expressed its concern on the weakening approved foreign investments in the Board of Investments (BOI) and the drop in approved investments in sectors of manufacturing and information technology and business process outsourcing in the Philippine Economic Zone Authority (PEZA).
AmCham said investment approvals in BOI and PEZA, the country’s top investment promotion agencies, predicts future FDI inflows in the country.
“During 2017, the manufacturing component of approved investment in PEZA decreased 46 percent from 2016, while the information technology component decreased 49 percent. The BOI reported that approved foreign investments in the fourth quarter of 2017 were only PHP22 billion, the lowest in eight years, while domestic firm applications reached a record level,” AmCham said.
“Since the PEZA and BOI data predicts future FDI inflows, this data, unless reversed, could indicate a dark cloud on the horizon,” it said. PNA