Foreign investments seen to sustain upsurge

MANILA, Philippines - Despite external economic challenges, the Philippines continues to see strong inflow of foreign direct investments (FDI), driven by the recovery in the manufacturing sector  and  the sustained growth in the services sector, according to the Bangko Sentral ng Pilipinas (BSP).

“Manufacturing for instance is picking up again in addition to the usual sources of growth like services. This will continue to be an attraction. Plus the fact that our economic fundaments remain sound and a young population that is economically active,’’ BSP Governor Amando Tetangco Jr said.

He said there is a huge market that could be tapped in the Philippines which has entered its demographic “sweet spot.”

“Remember we have an average age of 23.9 years or so, one of the youngest in the region, and foreign investors are taking a closer look at what are the opportunities here, given that we have a growing economy, young and economically-active population, and sustained macro-economic conditions,” Tetangco said.

The Philippines recorded a record $7.9 billion net FDI inflow last year, exceeding the full-year target of $6.7 billion, amid external shocks brought about by the decision of the United Kingdom to leave the European Union and the normalization of interest rates in the US.

The record FDI inflow was also 40 percent higher than the $5.64 billion recorded in 2015.

Data showed equity placements inched up 1.4 percent to $2.68 billion last year from $2.64 billion while withdrawals fell 22.1 percent to $643 million from $826 million.

Equity capital infusion came mostly from Japan, Hong Kong, Singapore, the US and Taiwan. The funds were invested mainly in financial and insurance; arts; entertainment and recreation; manufacturing; real estate; and construction activities.

The BSP sees FDI inflows reaching $7 billion this year as the Duterte administration committed to ramp up infrastructure spending.

BSP Deputy Governor Diwa Guinigundo said the Philippines has all the ingredients for a sustained strong inflow of FDI this year.

Unlike foreign portfolio investments or speculative funds, Guiniguno said FDIs are hard investments as investors took into consideration the country’s robust economic growth in deciding to put up factories, plants, among others in the Philippines.

“Foreign direct investors are taking a more sanguine, a more confident attitude toward the Philippines. We will continue to see higher FDI for 2017,” he said.