Drilon highlights drop in foreign direct investments

Senate Minority Leader Franklin Drilon has expressed concern over the huge drop in new foreign investments in the first half of this year.

Citing data from the Bangko Sentral ng Pilipinas, Drilon said foreign direct investments (FDI) showed a significant deceleration in the influx of new investments.

Foreign equity placements other than reinvestments of earnings decreased by 90.3 percent during the first six months of 2017 ($141 million) compared with the same period in 2016 (US$1.448 billion).

At the hearing on the National Economic and Development Authority’s (Neda) proposed 2018 budget, Drilon asked why the amount of new foreign investments has declined this year.

“Why such a huge drop? Is this an indication of anything?” Drilon asked.

Senate committee on finance chair Loren Legarda said that Neda has told the panel that the 90.3 percent plunge in FDI was caused by some restrictions.

Legarda admitted that she did not agree with the answer: “I am told that it is because of certain restrictions. I do not agree with that answer because these restrictions were already there when there was an increase.”

Expansion sites

Drilon urged Neda to explain. “If we are to attract new foreign investment, then it is about time that we take a serious look at how things are going on in our country, because new investment would not come in unless we are able to raise the investors’ confidence level in our country,” Drilon said.

Citing a study by The 2018 Asean Business Outlook Survey published by the American Chamber of Commerce in Singapore and the United States Chamber of Commerce, Drilon said that among the companies surveyed, only 22 percent chose the Philippines as a possible expansion location, with Vietnam topping the list (34 percent).

The Philippines ranked sixth lagging behind Vietnam, Myanmar (29 percent), Indonesia (29 percent) Thailand (26 percent), and Cambodia (23 percent).

Drilon pointed to the current political climate in the country as among the possible “stumbling blocks” that discourage foreign investors.

He cautioned against the continued depreciation of the Philippine peso, while the other regional currencies have already started to appreciate against the US dollar.

During the budget debates, Drilon pointed out that the Philippine peso depreciated by an average of 6.5 percent from January to August of this year.