THIS year we can expect strong foreign direct investment (FDI) inflows to continue, according to the Bangko Sentral ng Pilipinas (BSP).
Data from the BSP shows that FDI flows totaled $919 million in January 2018, up by nearly 57 percent from the $587 million recorded year-on-year.
Net equity capital inflows accounted for the bulk of FDIs during the month, rising more than eight times to $473 million from $58 million.
This was driven by a sevenfold increase in equity capital placements to $531 million.
The placements were sourced mainly from Singapore, China, Taiwan, Japan and the United States. These were channeled into manufacturing; financial and insurance; real estate; electricity, gas, steam, and air-conditioning supply; and wholesale and retail trade activities.
FDI inflows hit a new all-time high of $10.05 billion in 2017, up by 21 percent compared to 2016 levels and above the $8-billion BSP target. For this year the BSP has set a target of $8.2 billion in FDI inflows.
The BSP expects the government’s “Build, Build, Build” infrastructure program to attract private sector participation. The Department of Trade and Industry (DTI) is also bullish about a surge in foreign investments this year and the next.
Japanese investment pledges in the Philippine Economic Zone Authority and Board of Investments soared nearly 24 percent to P31.48 billion last year from P25.43 billion in 2016, while approved projects from China grew 15 percent to P1.61 billion from P1.40 billion in 2016.
On the other hand, investment pledges from US investors last year plunged nearly 70 percent to P8.357 billion from P27.51 billion in 2016.
Hence, the DTI is now exerting efforts to attract foreign investments through investment roadshows in Japan, Germany, other countries in Europe, and possibly the United States.
In a report, titled “2018 Best Countries to Invest In” released in March, the US News and World Report cited the Philippines as the top investment destination, citing the country’s $304.9-billion GDP, 103.3 million population, and $7,739 GDP per capita. But how do we stack up against our nearest neighbor across the South China Sea: Vietnam?
In 2017 Vietnam attracted FDI worth $35.88 billion, or nearly four times our FDI of just $10 billion. Japan invested more than $9 billion in Vietnam last year, or a little less than our total FDI for the year.
Vietnam has a population of 93 million, or 10 million fewer than Filipinos, and their GDP in 2017 stood at $202 billion as compared to our GDP of $305 billion. But their poverty level is only 13.5 percent, compared to our 23 percent to 24 percent. That means there are more poor people in our country than in Vietnam despite our bigger GDP. And if more foreign investors are going to Vietnam, does that mean that the US News and World report that we are the top investment destination in the world is far from the truth?
Philippines-China ties on the upswing
What is the current status of our relations with China?
Chinese Ambassador to the Philippines Zhao Jianhua, in a recent article, “China and the Philippines join hands to deepen cooperation and build The 21st Century Maritime Silk Road,” gives us a glimpse of Beijing’s overall assessment of our bilateral ties.
Zhao believes that, since the state visit of President Duterte to China in October 2016, China-Philippines relations have “achieved an overall turnaround, enjoyed sustained growth with strength and depth, and surged forward along a fast-track.”
Zhao said the four meetings so far between Chinese President Xi Jinping and Duterte “deepened strategic mutual trust” and enhanced mutual cooperation, thus “setting the course for a win-win and sound growth of China-Philippines relations.”
The official visit to the Philippines of Chinese Premier Li Keqiang in November 2017 further enhanced the friendship and mutually beneficial cooperation between the two countries. This was followed by the sharing of governance experiences between the two ruling parties, the resumption of a series of bilateral dialogue and cooperation mechanisms covering foreign affairs, defense, economy and trade, the establishment of the Bilateral Consultation Mechanism on the South China Sea, and the launching of the Joint Coast Guard Committee on Maritime Cooperation on regional and international affairs.
The two countries have also signed more than 40 cooperation documents since 2016. In 2017 China-Philippines trade volume exceeded $50 billion for the first time, making China the Philippines’s top trading partner, top import origin and the fourth-largest export market. China’s investments in the Philippines reached $53.84 million in 2017, representing a year-on-year increase of 67 percent. Beijing has also agreed to support various infrastructure projects, such as the Chico River Pump Irrigation, Kaliwa Dam, two bridges over the Pasig River and industrial parks. There’s also been enhanced bilateral cooperation in combating illicit drugs and terrorism, poverty alleviation, disaster relief and prevention, as well as in military affairs.
People-to-people exchanges between the two countries have, likewise, increased. Chinese visitors are now the second-largest tourist arrivals in the country. Last year the number of Chinese tourists visiting the Philippines doubled that in 2016. Each week, more than 300 flights shuttle between Chinese and Philippine cities.
Apart from this, the two countries have fostered interaction, exchanges and cooperation in terms of sisterhood provinces and cities, media agencies, think tanks, universities, youth affairs, education, science and technology, and culture and the arts. “The hearts and minds of our two peoples are interlinked more closely than ever before and the centuries-old friendship between our two countries are blessed with greater dynamism,” Zhao observed.
How does China’s envoy see the future of our bilateral relations? “China and the Philippines will surely become good neighbors helping each other, good friends supporting each other, and good partners benefiting each other. This not only serves both present and long-term interests of our two countries and peoples, but conforms to our common aspiration to safeguard peace, stability and prosperity in the region.”
E-mail: ernhil@yahoo.com.