FOREIGN business organizations in the Philippines have urged the Aquino administration to reexamine its business and investment policies anew as they expressed concern over the declining inflow of foreign direct investments (FDIs) into the country.
“I think it’s important to be aware that Southeast Asia is now the fastest-growing economy and getting the most rise in FDI (inflows within the region) is Vietnam. It’s quite remarkable that it’s now the No. 1 exporter in this region to the United States and it’s capturing the lion share of the relocation of investments from China,” noted John D. Forbes, senior advisor at the American Chamber of Commerce of the Philippines.
“The Philippines can capture more. [It] did a good job last year with FDI inflows reaching over $6 billion. But we’re somewhat concerned that that number has fallen by almost 50 percent in the first four months of this year, and so I think that’s reason for some reexamination on what the Philippines has been doing,” Forbes added.
According to latest data from the Bangko Sentral ng Pilipinas, net FDI inflows plunged by 48.3 percent to $1.2 billion in the first four months of the year from $2.38 billion in the same period last year. In April alone, FDIs fell by 43 percent to $382 million.
BSP data further showed that net equity capital investments shrank 50.5 percent to $279 million from January to April this year, equity placements declined by 61.6 percent to $369 million, while withdrawals similarly fell by 77.4 percent to $90 million.
Henry J. Schumacher, vice president for external affairs at the European Chamber of Commerce of the Philippines Inc. (ECCP), stressed anew the need to further open up the economy to boost FDI inflows.
Schumacher has remained hopeful on the passage of House Resolution No. 1, which seeks to ease the economic restrictions in the Constitution before the end of the Aquino administration, noting that the principal author, House Speaker Feliciano Belmonte Jr., has not given up on seeing the resolution through.
“On the good side, we are very happy to see corruption being addressed and being in the Integrity initiative, I can see the change happening. What we would like to see from a foreigner’s point of view is that the door will be opened a bit wider so that more competition can be created, which is good for Filipinos,” Schumacher added.
Earlier, regional think tank Stratbase ADR Institute (ADRi) noted that the Philippines remained only “half open for business” as its potential for economic growth continued to be hampered by restrictive economic provisions that limited the entry of FDIs.
“The limits set by the country’s constitution on foreign equity in real estate and in key industries has set up a half-open and restrictive business environment that has frustrated the influx of much needed [FDI],” ADRi president Victor A. Manhit said in a earlier statement.
Equities THE LOCAL stock barometer pulled back by 1 percent yesterday as a six-day run-up spurred profit-taking while jitters on the US Federal Reserve’s future interest rate increases muted trading across the region.
The main index was also weighed down by the sharp decline in two large companies—Semirara and DMCI—which respectively lost 13.6 percent and 7.7 percent after last weekend’s accident at the Panian mine, which killed at least seven miners. Two more are still mining as of press time after the collapse of a portion of the open-pit mine.
The Philippine Stock Exchange index (PSEi) lost 75.96 points to close at 7,541.17.
The mining/oil index slumped by 6.25 percent due to the freefall of Semirara and its parent firm DMCI. The industrial and holding firms also weighed down the index.
Total value turnover amounted to P12.75 billion. There were 68 advancers, which were outnumbered by 92 decliners, while 52 stocks were unchanged.
Only the services counter was modestly up.
URC also weighed down the index, declining by 2.2 percent, while BDO, Jollibee, Metrobank and SMIC all fell more than 1 percent.
AC, GTCAP, ALI and Bloom also faltered.
On the other hand, Globe, PLDT and JG Summit firmed up. Other notable gainers outside the PSEi were gaming stock Melco (+6.78 percent) and property developer DoubleDragon (+3.24 percent).
Across the region, sentiment was sluggish as investors factored in the imminent increase in interest rates from the US Fed. As jitters over debt-strapped Greece and China’s stock market slump eased, markets again took their cue from the US Fed.
Regina Capital managing director Luis Gerardo Limlingan said that only a successful breakout of the key resistance level at 7,631 would trigger a “buy” condition and would support a run-up to 7,700.
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