NEDA says foreign businesses confident on Philippines

October 10, 2017

The National Economic and Development Authority (NEDA) on Tuesday gave the assurance  foreign investors remain confident to do business in the Philippines despite the 14 percent decline in foreign direct investments (FDI) in the first half.

The NEDA said foreign equity placements, which Senate Minority Leader Franklin Drilon pointed out during the Senate interpellation last week on NEDA's proposed budget, is only a component of total FDI. Other components of FDI are reinvestment of earnings and intra-company loans or debt instruments.

According to the Bangko Sentral ng Pilipinas, FDI posted a net inflow of $674 million in June, an increase of 182.7 percent from $238 million for the same period last year.

For the first half of 2017, FDI registered net inflows of $3.6 billion, 14 percent lower than the $4.2 billion net inflows posted in the same period last year. This was due to a sharp decline in the net equity capital. Equity capital declined to $141 million in the first half of 2017 from $1.448 billion in the same period last year.

NEDA Officer-in-Charge and Undersecretary Rolando Tungpalan also underlined the rosy business outlook for the last quarter of 2017, citing results of the Business Expectations Survey (BES) quarterly conducted by the BSP.

Respondents in the BES were drawn at random from the combined list of the Securities and Exchange Commission’s Top 7,000 Corporations in 2010 and Business World’s Top 1,000 Corporations in 2015.

Among the reasons for the positive outlook of businesses, according to the BES, are the uptick in the consumer demand during the holiday, harvest and milling seasons, and the government's massive infrastructure spending program

Drilon at the Senate plenary on Friday expressed concerns over what he said “a significant deceleration in the influx of new investments.”

NEDA explained that the figure on foreign equity placements is not the entire FDI.

“While the data on equity placements serve as a gauge of new FDI entry and overall investor confidence, the figure is not complete. The figure does not show the total inward investments made by foreign investors in the country,” said Tungpalan.

The huge decline in the net equity capital is also attributed to a high base year. The BSP data in the first half of 2016 showed net equity capital grew by 121.5 percent on account of the combined effects of higher gross equity capital placements and lower gross equity capital withdrawals.

NEDA is exhausting all measures to improve the business climate, particularly easing foreign restrictions on several areas of business through the foreign investment negative list (FINL). A draft FINL is now up for review and adoption by the NEDA Board, which is chaired by President Rodrigo Duterte.

To further attract more foreign investment, President Duterte's economic managers have been holding a series of Philippine Economic briefings overseas.

The delegation which includes Socioeconomic Planning Secretary Ernesto Pernia, Budget Secretary Benjamin Diokno, and Finance Secretary Carlos Dominguez III will be in New York City to speak on investment opportunities in the Philippines. DMS