The Market Monitor Minding the Nation's Business
By Riza Lozada
Big foreign investors continue to bypass the country, despite government claims of improved business perception, as shown by the country’s measly 4.6-percent share in the total foreign direct investments (FDI) that flowed into the economies of the Association of Southeast Asian Nations (Asean) in the first half of 2015.
The Joint Foreign Chambers in the Philippines (JFC) revealed the figures and, in a statement of concern, proposed “action plans” to improve the country’s FDI, noting that the net inflow for the first six months of 2015 was even 40 percent lower than last year’s at $2 billion; the 2014 figure was $3.4 billion. The JFC also urged the Bangko Sentral ng Pilipinas (BSP) to explain the continued decline of the FDI in the country.
The Philippine Export Zone Authority (Peza), the agency that traditionally corners the country’s highest FDI, reported that new investment approvals (both greenfield and expansion projects) during the first semester reached only $1.8 billion, down from $2.4 billion in the same period in 2014, or a 33-percent decline.
For the comparable annual approvals for the periods ending September 15, there was no significant difference: $3.2 billion in 2014 vs $3.1 billion in 2015, according to JFC.
“This downturn in 2015 follows a record year in 2014, when the total net FDI in the Philippines reached $6.2 billion, up 479 percent from net FDI of $1.1 billion in 2010,” the JFC said.
“Although 2014 was a record year for FDI flowing into the Philippines, many have observed the inflow was much, much less than Singapore’s $67.4 billion, Indonesia’s $25.7 billion, Thailand’s $11.8 billion, Malaysia’s $10.5 billion, and Vietnam’s $6.6 billion,” the JFC said.
Last year, the country recorded a new inflow of $6-billion FDI, which was the highest ever, but paled in comparison to its regional peers.
The JFC represents over 3,000 member-companies engaged in over $230 billion worth of trade and some $30 billion worth of investments in the Philippines.
The proposed action plan include the enactment into law of amendments to the Apprenticeship Act, the BOT (build-operate-transfer) Act and the Customs Modernization and Tariffs Act, the creation of a Department of Information and Communications Technology, amendments to the Foreign Investments negative list, the passage of the Freedom of Information Act, and amendments to the Right-of-Way law.
Also, the JFC also urged the government to enter into major foreign-trade and investment treaties with the European Union and the Trans-Pacific Partnership (TPP), both of which comprise 60 percent of global gross domestic product (GDP), with markets involving 1.3 billion people.
The JFC likewise urged the fast-tracking of public-private partnership (PPP) projects.
The JFC reiterated concerns over the possible recurrence of port congestions as a result of the imposition of truck bans in Metro Manila as it urged the government to act on the gridlock in Metro Manila and the flight delays at the Ninoy Aquino International Airport (Naia).
The chambers also proposed the timely processing of value-added tax (VAT) refunds for eligible companies.