Philippines Upbeat on Foreign Investment Outlook Despite H1 Drop
Manila. The Philippine government remains upbeat on prospects for attracting more foreign investment, officials said on Wednesday (11/10), despite a double digit-decline in the first half of the year.
The office of the president and the central bank both defended the government's ability to attract investors after a senator said last week that a 90 percent decline in foreign equity inflows in the first half was "very alarming."
"The reduction in equity inflow does not present the full foreign direct investment picture," presidential spokesman Ernesto Abella said in a statement.
"Several investors remain bullish on the Philippine economy and confident in the current administration."
Senator Franklin Drilon's comments at a budget hearing last week have grabbed media headlines.
The Philippines is one of Asia’s fastest growing economies but it lags its regional peers in terms of attracting foreign direct investment (FDI) because of foreign ownership restrictions, high power costs and poor infrastructure.
Net FDI of $3.6 billion in the first half of the year was 14 percent lower than the same period last year.
The drop would be taken into account when the central bank reviews its full-year FDI forecast of $8 billion later this month, said Zeno Abenoja, the central bank's director of economic research.
"We continue to have a good foundation for medium term growth, external buffers continue to be adequate and there is still that attractiveness for investors to come in given the continued favorable outlook for the Philippines," Abenoja told Reuters.
Reacting to the senator's comments, Abenoja said it was "hard to zero in" on the foreign equity capital component of FDI because it does not capture the whole investment story.
"We think it is narrow to just look at that portion of he FDI. We should also look at entire set of data for FDI," Abenoja said, as FDI also covers reinvestment and inter-company borrowings.
Since coming to power in June 2016, Philippine President Rodrigo Duterte has vowed to open up the economy and liberalize sectors such as energy, power and telecoms to make the country more competitive.
But Duterte also has promised to shun aid and investment from countries worried about his bloody war on drugs.
The government plans to cut the number of sectors and activities closed or limited to foreign investors to get more of the investment flows into Asia.
FDI hit a record $7.9 billion in 2016, central bank data showed, but the figure pales in comparison with those it has for Vietnam ($12.6 billion) Malaysia ($13.5 billion) and Singapore ($61 billion).
Reuters
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