FOREIGN DIRECT INVESTMENT (FDI) inflows to the Philippines grew faster than the Southeast Asian average last semester, though the country’s volume paled in comparison with those of some of its regional peers.
The latest Investment Trends Monitor of the United Nations Conference on Trade and Development (UNCTAD) said FDI flows to Southeast Asia increased by 18% year-on-year to $73 billion, driven largely by Singapore’s $35 billion, Indonesia’s $9 billion and Thailand’s approximately $7 billion.
In comparison, data from the Bangko Sentral ng Pilipinas (BSP) showed that FDI net inflows to the Philippines rose 42.4% to $5.755 billion last semester from $4.041 billion in 2017’s first half.
The central bank has projected these inflows to hit $9.2 billion for full-year 2018 from the actual $10.049 billion actually received in 2017.
American Chamber of Commerce of the Philippines, Inc. Senior Advisor John D. Forbes said in a mobile phone reply to a request for comment that “… the high level of FDI flowing into developing countries is good for the Philippines, which is increasingly receiving a larger part of this pie than previously”.
BSP data also show the Philippines’ closest Southeast Asian competitors for FDIs, Thailand and Vietnam, growing inflows by 67.08% to $6.912 billion from $4.137 billion and by 11.84% to $6.99 billion from $6.25 billion, respectively.
The UNCTAD report said global FDI inflows fell by 41% to $470 billion last semester from $794 billion in 2017’s first half “mainly due to large repatriations by United States parent companies of accumulated foreign earnings from their affiliates abroad following (US) tax reforms”.
The decline was driven largely by a 69% year-on-year drop to $135 billion in developed economies, while inflows to developing markets slipped by four percent to $310 billion.
Inflows to developing Asia similarly dipped by four percent to $220 billion.
China, which saw inflows grow by six percent to $70 billion, was the biggest global FDI recipient, the report noted.
Britain placed second with $66 billion and the United States followed with $46.5 billion.
“The investment flows are more policy-driven and less economic cycle-driven,” UNCTAD investment chief James Zhan said at a news conference in Geneva, citing the US tax reform and economic liberalization in China.
“Overall, the picture is gloomy and the prospect is not so optimistic.”
FDI, comprising cross-border corporate takeovers, intra-company loans and investments in start-up projects abroad, is a bellwether of globalization and a potential sign of growth of corporate supply chains and future trade ties.
But it can also go into reverse as companies pull out of foreign projects or repatriate earnings.
Such reversals could erode the importance of international supply chains, which became an increasingly important driver of international trade until 2011 and subsequently stagnated, Mr. Zhan said.
“If there’s a lack of FDI for expansion of the value chains then of course it will impact on global value chains and therefore impact on global trade,” he said.
“It’s difficult to tell whether we are at a turning point (in globalization) or if this is only a slowdown.”
Despite the overall slowdown, money going into newly announced start-up projects — so-called “greenfield” investments — increased by 42%, providing a glimmer of hope that more money will follow and drive more spending and trade in future.
Greenfield investments in Asia hit a record, driven by China’s $41-billion crop and a surge of Southeast Asian projects, especially in Indonesia ($28 billion), Vietnam ($18 billion) and the Philippines ($12 billion). — with Janina C. Lim and Reuters

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