THE country’s $20.1 billion in net foreign direct investments (FDI) over the two-year period of 2017 and 2018 is “unprecedented” and shows the deepening investor confidence in the Philippines, according to the Department of Finance (DOF).
In a statement on Thursday, Finance Secretary Carlos G. Dominguez III said, “Our net FDI inflows of about $10 billion yearly in 2017 and 2018, which total $20.1 billion is unprecedented. No other administration has shown this consistency.”
Data from the Bangko Sentral ng Pilipinas (BSP) showed net FDI inflows rose to $10.3 billion in 2017, which is double the amount of $5.6 billion in 2015, while the full-year net FDI inflows reached $9.8 billion for 2018.
“This best illustrates deepening investor confidence in the Philippine economy as the government pursues business-friendly reforms on the watch of President Duterte,” he added.
The DOF pointed out that in 2010, net FDI inflows reached only $1.1 billion, which inched up to $2.0 billion in 2011, $3.2 billion in 2012 and $3.7 billion in 2013.
Meanwhile, net FDI inflows amounted to $5.7 billion in 2014, went down slightly to $5.6 billion in 2015 and shot up to $8.3 billion in 2016.
BSP data also show that for 2018, net investments of equity capital were lower at $2.3 billion compared to $3.4 billion recorded in 2017, with the bulk of equity capital placements sourced mainly from Singapore, the United States, Hong Kong, Japan and China.
These were channeled primarily to: manufacturing, financial and insurance, real estate, electricity, gas, steam and air-conditioning supply, and arts, entertainment and recreation industries.
Reinvestment of earnings also declined slightly by 0.4 percent to $859 million in 2018 from $863 million in 2017. By contrast, net availment of debt instruments rose by 11.3 percent to $6.7 billion in 2018 from $6 billion in 2017, according to BSP data.
In an economic bulletin issued by the DOF on Wednesday, Finance Undersecretary Gil S. Beltran said the economy became more investment-led in 2018.
“As percentage of GDP [gross domestic product], capital formation, which is the most comprehensive measure of investment, rose from 24.4 percent in 2016 to 25.1 percent in 2017 and further to 27.0 percent in 2018,” said Beltran, who is also the Chief Economist of the DOF. The DOF reported that the Philippines should use the time when the global economy is posting a slower-than-expected pace of growth to improve the country’s investment environment.
The drop in the country’s 2018 FDI levels to $9.802 billion from the 2017 level of $10.256 billion was attributed to the volatile global economic environment during the year, according to the DOF.
The DOF pointed out that to increase investments made in the Philippines by other countries, it needs to further cut red tape, as well as ease restrictions on foreign ownership, as the country is reputed to have one of the most restrictive investment regimes in Asia.