THE Joint Foreign Chambers (JFC) said they expect foreign direct investment (FDI) this year to once more top the $10 billion level, which the Philippines first attained 2017.
“The prospects are high that, with continued political and economic stability, FDI will be above $10 billion in 2019,” they said in a statement on Thursday.
In 2018, FDI net inflows were at $8.53 billion in the 10 months to October FDIs, and are believed to be on track to hit the $10.4 billion target for the year.
“In 2017 and 2018, this level came close to the FDI volume received by ASEAN neighbor Malaysia and more than Thailand, whereas in past years Philippine FDI was comparatively very small,” the group added.
Drivers for this year’s forecast are the creative, infrastructure, manufacturing, and tourism sectors.
“Creative Industries — which includes media and publishing — are the country’s newest sunrise industry. The ‘Build, Build, Build’ program, continuing policies of the previous administrations, has achieved much higher levels of public sector spending on infrastructure, without which the economy would regress,” the group said.
For manufacturing, the JFC cited opportunities from the US-China trade dispute to yield positive effects “depending on the future menu of tax incentives that compensate for the country’s lagging basic infrastructure without which the economy would regress.”
International tourism is also being touted as “growing steadily albeit hampered by airport and road congestion and still far behind Indonesia, Malaysia, Singapore, Thailand, and Vietnam, each of which hosts at least twice as many visitors annually as the Philippines.”
The group also noted the need to resolve the challenges besetting the agribusiness, BPO, and mining sectors.
As such, the group offered recommendations for government to further improve the overall economic landscape.
“Overall, we are hopeful that with continued politico-economic and regulatory stability, 2019 will be a year of more high growth, tempering inflation, and high FDI for the Philippines. We invite foreign firms that have not located in the country to come, take a look, and join us,” the JFC said.
Specifically, the group expects a positive turnaround in the Philippines’ international competitive rankings, such as the Doing Business, the E-Government Readiness Survey, and the World Competitiveness Yearbook studies.
“Activation of the Anti-Red Tape Authority and implementation of RA 11032, the Ease of Doing Business Act, is needed to produce the anticipated results of this important reform,” the group added.
The JFC also pointed out the need to broaden access to foreign markets, suggesting continued dialogue with the European Union with which the country has been in talks with for a potential free trade agreement. It also backed initiating talks to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as well as for a trade and investment agreement with the United States.
The JFC reiterated that Congress must “pass reforms that will lead to many tens of billions of additional foreign investment, better technology and jobs, and more competition.”
The group cites as key reforms the proposed amendments to the Foreign Investment Act, Open Access in Data Transmission bill, Public Services Act, Retail Trade Act, and the removal of various constitutional restrictions on foreign investment.
The JFC also renewed appeals for lawmakers to revisit the Comprehensive Tax Reform program “in a manner not to discourage export-oriented investors.”
The JFC is a coalition of the US, Australia-New Zealand, Canadian, European, Japanese, and South Korean chambers, and the association of multinationals, which is known as PAMURI. It represents over 3,000 member-companies engaged in more than $100 billion worth of trade in goods and services and some $30 billion in investment in the Philippines. — Janina C. Lim