Foreign companies are turning cautious on investing in the Philippines, as President Aquino’s departure in 2016 looms.
Data from the Philippine Statistics Authority on Tuesday show some warning signs, as did the latest central-bank figures:
- Approved foreign investment in the second quarter rose 0.5 percent from a year earlier to P36.2 billion, or $776 million, after a decline the previous quarter.
- Approved foreign investment in January to June fell 21 percent from a year earlier.
- Net foreign direct investment inflows slid 40.1 percent in January to June from a year earlier, according to central-bank data, after surging to a record$6.2 billion in 2014.
After the Philippines lured investment from Coca-Cola Co., Mitsubishi Corp. and AES Corp.—winning credit-rating upgrades since Mr. Aquino took office in 2010—uncertainty over who will succeed him is now a focus for companies.
Along with a slow start to government spending this year, the uncertainty is damping the outlook for an economy that in recent years has been among the region’s fastest growing.
“During presidential-election periods, investment tends to slow down a bit, given the uncertainties surrounding the new administration policies,” said Michael Wan, a Singapore-based economist at Credit Suisse Group AG.
“There’s no guarantee they will recover but once investors get better clarity of who the next leader is and his policies, investment will pick up.”
The Asian Development Bank on Tuesday cut its growth forecast for the Philippines for this year, but expects an improvement in 2016.
The Philippines is scheduled to hold presidential elections in May 2016.