MANILA, Philippines — The Philippines should open further to foreigners if it wants to corner more job-generating investments, Asia-based Hinrich Foundation said on Tuesday.
There’s a “window of opportunity that might be the right moment to open the country," Riccardo Crescenzi, professor of economic geography at the London School of Economics, said in an online forum organized by Hinrich.
Crescenzi did not explain when this opportunity would come, nor what’s with this window that would allow the economy to open up more to foreign investors. For years, the Philippines has lagged behind its regional peers in attracting FDI, no thanks to its decrepit infrastructure.
After reaching a record-high $10.1 billion net inflows in 2017, data showed FDI to the Philippines started declining from that peak, with the pandemic worsening the downtrend.
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As virus curbs ease around the globe, FDI net inflows hit an all-time high of $10.5 billion last year. Meanwhile, the outgoing Duterte administration managed to make a last-minute push to enact laws that relax restrictions on foreign investments.
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Crescenzi and Oliver Harman, cities economist for the International Growth Centre at the University of Oxford, wrote a research commissioned by the Hinrich Foundation that looked into different ways FDIs and global value chains could be leveraged by countries.
For Harman, the Philippines has experienced "outward and inward" FDI, wherein a country would invest overseas and bring home lessons it picked up from that investment experience.
The research noted that the Philippines, alongside Cambodia, Indonesia, Thailand, and Vietnam, depend on its regional peers for “inward” investments. At the same time, this same cluster of countries also directed their investments to countries in East and Southeast Asia — a type of “outward” FDI that, the researchers said, could bring in new knowledge that facilitates economic development.
"There are pressure to sort of engage in economic resiliency policies by looking inward. In the long run, it’s important for economies to remain open," Harman said.
Harman believes opening the Philippines further to the rest of the world could prove easier in the coming years, citing the local call center industry which has thrived in regions outside the capital. He said cities like Baguio and Bacolod managed to win investments from BPO firms when they understood the needs of the industry and identified the regional assets with whom the two cities should couple.
“Attracting FDI requires a consideration for actions at lower geographical scales. It also reminds policymakers that, while regional assets can take a long time to change, local institutions can match existing links to global networks in the short term,” the researchers said.