EDITORIAL — FDI laggard

The fuel crisis won’t last forever. When the situation stabilizes, there will be a race toward recovery. Countries that were already ahead before fuel prices began surging will likely be in the best position for a speedy recovery from the global economic slowdown.

For the Philippines, the challenge will not only be to keep up with its neighbors, but also to ensure that it does not slide further down in terms of development.

The country will have to do better than the situation in January even before the Iran war, when the Philippines dropped two spots to 18th place out of 25 emerging markets in the 2026 Foreign Direct Investment Confidence Index.

The Philippines has seen a progressive decline in the FDI index, from 12th spot in 2023 to 13th in 2024 and 16th last year.

Last January when global management consulting firm Kearney drew up the latest index, FDI net inflows to the Philippines dropped to a four-month low of 39.2 percent year-on-year to $443 million. This came on the heels of a 10-year low – excluding the pandemic years – in FDI net inflows in 2025, which fell 17.1 percent from 2024.

The corruption scandal that erupted last year could have weighed on investor sentiment. The FDI Confidence Index is based on a proprietary survey of 507 senior executives of the world’s top corporations.

The Philippines ranked behind other emerging markets in Southeast Asia, with Thailand placing sixth, Malaysia seventh, Indonesia 13th and Vietnam 16th. Analysts said the Philippines’ ranking is being pushed down by its regional peers, which are doing better in attracting FDI.

Even the Philippines’ traditional edges such as its workforce are being eroded by its neighbors’ rising competitiveness in various areas, the analysts said.

Investors have long raised their concerns about doing business in the Philippines: inadequate infrastructure, red tape and corruption, complex and erratic regulation, a compromised legal system, and deteriorating education that has affected innovation and overall national competitiveness. The unresolved budget and flood control corruption scandal has compounded these problems.

For the third consecutive year, the FDI index was topped by emerging markets China, the United Arab Emirates and Saudi Arabia. The two Middle East countries host hundreds of thousands of Filipinos, who have found it necessary to seek employment overseas for lack of opportunities in their homeland.

FDI can create meaningful jobs that can take those Filipinos out of harm’s way in the Mideast war zones, and entice them to work in their own land. But the government must first do its homework, by creating the proper environment for job-generating investments.