Philippines now preferred by China investors, says SKF

MANILA, Philippines — The Philippines is increasingly becoming a preferred investment destination for Chinese capital in the region, according to the new report New Frontiers: Prospects for Real Estate Along the Belt and Road Initiative, by leading real estate advisory firm Santos Knight Frank.

The report, authored by Santos Knight Frank’s global partner, Knight Frank, aims to help investors and occupiers understand potential opportunities that China’s Belt & Road Initiative (BRI) can generate beyond its borders. 

The country’s 2019 ranking on the report’s BRI Index jumped six notches to 44th place from last year, citing improvements in institutional effectiveness and market accessibility. Institutional effectiveness metrics include areas such as regulatory quality and gAovernment effectiveness, while market accessibility pertains to foreign direct investment (FDI) and FDI inward flows and stock.

Nearly $200 million in net FDI from China was registered in 2018 – seven times the amount in 2017, based on preliminary data from the Bangko Sentral ng Pilipinas. China was the fourth largest source of FDI after Singapore, Hong Kong and Japan.

The Philippines’ improved relationship with China has resulted in greater investment commitments in infrastructure. Major infrastructure deals signed with China include the Manila-Bicol railway project ($270 million) with China Railway Engineering and the Davao land reclamation project ($200 million) with China Communications Construction, according to data compiled by The American Enterprise Institute and The Heritage Foundation.

Santos Knight Frank believes that further infrastructure deals can be anticipated in the second half of the administration’s term, helping keep the Philippines’ infrastructure program Build Build Build on track towards achieving greater countryside development.

In addition, Chinese companies are also initiating or expanding their presence in key sectors such as residential property, logistics, tourism and industrial. Inbound tourism from China has already risen by almost 30 percent in 2018 and was the second biggest international market of the Philippines, accounting for 17.6 percent of arrivals last year.