FOREIGN direct investments (FDI) started the year on a positive note in early January, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday. The country, however, needs to do more as these investments are expected to decline due to the global pandemic, the BSP chief said.
In a statement, the BSP reported that FDIs hit $657 million in January, growing by 12.1 percent from its level in the same month last year. The BSP attributed the increase in FDI during the month to the net inflows of equity capital—which amounted to $352 million. In comparison, equity capital in January 2019 registered a net outflow of $43 million.
This development, however, was before the imposition of the community quarantine in the country due to the Covid-19 pandemic.
FDIs are investments that are made by foreign players to the Philippines in the hope of reaping long-term return. Since these are in the country for a longer term compared to their short-term counterpart—the foreign portfolio investments (FPIs)—the FDIs usually create jobs for Filipinos and have a multiplier effect on the economy.
In early March, international think tank Fitch Solutions warned that FDIs to the country will likely take a big hit due to the Covid-19 pandemic, given the country’s relatively high percentage of Chinese FDIs.
Mainland China accounted for around 12.3 percent of FDI inflows between January and November 2019, with South Korea, Singapore and Japan also key sources of investment flows.
Thus, BSP Governor Benjamin Diokno said it is crucial that the Philippines do something to retain the country’s “investability,” especially when economies start to recover from the global health crisis and when investors restart looking for an opportunity to put their funds on.
“The Philippines is a very attractive place to invest post-Covid. There is a study by The Economist ranking the Philippines as one of the most attractive investment destinations post-Covid. So we are banking on that, but I think we should, also as a country, not rest on those international publications’ support. I think we should do more,” Diokno said.
Diokno made the call to legislators to “pass all those laws” that will make the economic environment more attractive to these foreign investors.
While the BSP governor did not cite which specific laws, the BSP has been long vocal in its support to key economic proposals pending in the legislative branch, the latest of which is the Financial Institutions Strategic Transfer (FIST) Law.
“The passage of the law will promote investor and depositor confidence and will result in the efficient conduct of financial intermediation,” the governor earlier said.
Image credits: Nonoy Lacza
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