Why are we behind in foreign investments?
Credit to Author: Tempo Desk| Date: Mon, 17 Jun 2019 18:30:26 +0000
IN so many ways, we are doing well in our economic development. In one area, however, we are behind our neighbors in Southeast Asia. This is in the area of Foreign Direct Investments (FDI) – the amounts foreign nations and international organizations invest in our economic development programs.
The World Investment Report of the United Nations Conference on Trade and Development (UNCTAD) for 2019, which it released last Wednesday, said FDI in the Philippines in 2018 totalled $6.45 billion. It was down from the 2017 figure of $8.7 billion.
In contrast, our neighbor to the south, Indonesia, had $22 billion in foreign investments in 2018, more than three times that of the Philippines. Thailand had $10 billion.
The Philippines’ $6.45-billion FDI in 2018 constituted only 4 percent of the total received by all Southeast Asian nations – $148.69 billion. Our FDI went down by 26 percent from last year, at a time when the total FDI for Southeast Asia went up by 3 percent.
All nations welcome foreign investments as these are additional resources that create or enhance economic activities. Even the United States, the world’s most advanced economy today, welcomed $253.2 billion in FDIs in 2017. China today rivals the US in getting FDIs from investors around the world.
In the Philippines, we have several government agencies promoting FDIs, led by the Board of Investments (BOI), the Clark Development Corporation (CDC), the Philippine Export Economic Zone Authority (PEZA), and the Subic Bay Metropolitan Authority (SBMA).
In many parts of the country today, we have PEZA zones where many foreign firms operate, providing employment to millions of Filipinos. We also have Business Processing Offices (BPO) maintained by foreign firms, manned by capable Filipino workers fluent in English. Then, of course, we have millions of overseas Filipino workers (OFWs) all over the world. All these are part of the way our country, with its limited financial resources, is earning dollars, euros, and other foreign exchange, which it uses for its economic development.
Foreign Direct Investments are an important part of these international resources. We thus need to determine why the Philippines is way behind other Southeast Asian nations in attracting these international development funds.
After the first tax program – the TRAIN Law – went into effect last year, the Department of Finance is now preparing a Package 2 to lower the corporate income tax and modernize fiscal incentives, a Package 3 to reform the property evaluation system, and a Package 4 to rationalize capital income taxation.
As we institute these reforms to maximize the raising of funds from local sources, let us also take steps to maximize the help provided by Foreign Direct Investments. Surely we have resources that should attract more foreign investors to our country.