MANILA, Philippines – The Philippines still remains in the list of most promising investment destinations worldwide as reforms to facilitate foreign direct investment (FDI) inflows are made, according to the 2017 World Investment Report released by the United Nations Conference on Trade and Development (UNCTAD) yesterday.

The country is among the choice prospective host countries by multinational enterprises (MNEs) for the years 2017 to 2019 along with other countries in developing Asia such as Indonesia, Thailand, Vietnam, China, India and Singapore.

“Top executives maintain their confidence in developing Asia’s economic performance,” said the report.

Among developed nations, meanwhile, MNEs prefer to invest in the United States, Canada, Spain, and United Kingdom.

In 2016, foreign direct investment (FDI) inflow into the Philippines rose to a record high $8 billion, bucking the regional decline. Following a record high in 2015, combined FDI inflows to developing Asia contracted 15 percent to $443 billion in 2016.

This year, however, UNCTAD expects FDI inflows in developing Asia to increase 15 percent as the improved outlook in major Asian economies is likely to boost investor confidence in the region.
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“In major recipients such as China, India and Indonesia, renewed policy efforts to attract FDI may also contribute to higher inflows in 2017,” said the report, noting the Chinese government is opening a wide range of industries to foreign investment including extractive industries, infrastructure, finance and manufacturing.

This will naturally have a spill- over effect to lesser-developed countries like the Philippines.

UNCTAD said this year, the Philippines stands to receive greater FDI inflows in line with the growth prospects in developing Asia. This is largely due to expectations that more developed countries will be focusing in the manufacture if goods with higher value added and would be outsourcing labor intensive activities to less developed countries.

“In South and South-East Asia, several countries, including Bangladesh, Nepal and the Philippines are expected to receive more FDI in the years to come especially from within the region, in line with a division of labor between more developed countries and less developed countries,” said the report.

“This may continue to strengthen these countries’ positions in regional production networks. For instance, five Chinese companies plan to invest $10 billion in the aviation, downstream oil, renewable energy, iron and steel, and shipbuilding industries in the Philippines,” it added.

On its own, the Philippines implemented several policy measures that aim to facilitate the flow of investments, one of which is “Project Repeal: The Philippine Red Tape Challenge,” which as its name implies, is meant to revoke regulations that are unnecessary or may be detrimental to the economy.

The country also permitted 100 percent foreign ownership in the financing sector which covers insurance companies, lending companies, financing companies and investment houses.

Global investment flows is expected to rise slightly to $1.8 trillion in 2017 and continue to rise to $1.85 trillion in 2008, still below the 2007 peak but higher than 2016 levels of $1.75 trillion.

While a modest recovery is seen in the global investment environment for this year and the next, UNCTAD said this may still not be enough considering the enormous investment needs connected with the Sustainable Development Goals (SGDs).

“Progress on sustainable development – and lasting peace – requires more investment in basic infrastructure, energy, water and sanitation, climate change mitigation, health and education, as well as investment in productive capacity to generate jobs and income growth,” said the report.

09 June 2017
By Czeriza Valencia