Remittances, FDIs buoy Philippine economic growth

CEBU, Philippines - The Philippines' robust external position, which is supported by remittances and foreign direct investments (FDIs), continues to support economic growth.

Economic Planning Secretary Emmanuel Esguerra, however, pointed out that other countries in Southeast Asia are still far ahead of the Philippines in terms of attracting FDIs.

In 2015, net inflows of FDIs were nearly flat to $5.724 billion from $5.74 FDIs posted in 2014.

In an earlier interview, International Monetary Fund Resident Representative to the Philippines Shanaka Jayanath Peiris stressed that the Philippines should address its infrastructure gap and improve its regulatory framework to attract more foreign investments.

Peiris said it's the infrastructure and a good regulatory framework that will bring in investments and not necessarily the incentives.

The IMF official said cost of doing business in the country is still high.

Bureaucratic inefficiency, poor infrastructure, foreign ownership restrictions and lack of competition in key industries are among the key problems in attracting more foreign investments into the country.

This year, the government is eyeing to take in $6.3 billion in foreign capital.

On remittances, Esguerra said the money sent home by overseas Filipino workers continued to grow although deployment of workers slowed down albeit remained steady.

"The growth of remittances is still expected to continue," said Esguerra, who is director general of NEDA.

The Bangko Sentral ng Pilipinas earlier reported that cash remittances stood at $2.11 billion in February this year from $1.94 billion in February 2015.

"The steady deployment of OFW workers remained a key driver to the growth of remittance inflows," the central bank said.

Cash remittances stood at $4.133 billion year-to-date, up 6.2 percent from last year's comparable period.

The biggest sources of remittances are Filipino workers based in Singapore, Hong Kong, United States, United Kingdom, Canada, Japan, Saudi Arabia, United Arab Emirates and Qatar.

The BSP is projecting a 4 percent growth in remittances this year amid the concerns on slower global growth prospects and weaker global commodity demand.

Furthermore, NEDA's Esguerra also said earnings from the business process outsourcing (BPO) sector will continue to grow as it is catching up with remittances as main foreign exchange earnings.

"That is certainly something to watch out for," he said. — (FREEMAN)