The challenge of attracting more investments under

Investments, local and foreign, are like pools of water flowing down. They go where they are allowed and welcomed, not where they are restricted and barred. So government and national policies set the tone and signal if they welcome, partially disallow, or explicitly restrict investments.

Foreign investments are particularly very mobile and flexible. They can come and go in major cities in the world in very short period like within hours or minutes, such as investments in the stock markets and commodities.

Foreign direct investments (FDIs) are for long-term engagement. Once they have decided to come or skip a country or economy, there is little flexibility left because the sunk cost of putting up a factory, hotel, or power plant is huge. It is this type of long-term foreign and local investments that a developing economy like the Philippines should attract and welcome, not restrict and discourage.

The Philippines is not exactly a good haven for FDIs mainly because of the restrictions and the unwelcoming tone of our Constitution where many sectors are outrightly banned to FDIs ( media, hospitals, universities, electricity distribution, etc.) or allowed but only up to 40% maximum in total equity investments. Socialist Vietnam has overtaken the Philippines more than two decades ago in attracting FDIs while late-comer Myanmar is trying to catch-up with us, attracting some investors restricted by the latter (see Table 1).

Notice in Table 1 the huge jump in FDIs under the past Benigno S. C. Aquino III administration, almost double compared to the amount attracted by the earlier Gloria Macapagal Arroyo administration.

In terms of accumulated and net inward stock (inflows less outflows of capital) of FDIs, the past Aquino administration has more than doubled the stock in just five years, from $26 billion in 2010 to $59 billion in 2015. Cambodia and Laos have also experienced this more than two times expansion in FDI stock in just five years, but at a lesser magnitude or volume of capital.

Note also the huge volume of FDI stocks in our neighbors in the region, especially Hong Kong,

Socialist Vietnam has overtaken the Philippines more than two decades ago in attracting FDIs while latecomer Myanmar is trying to catch up with us.