Drilon concerned about decline in new foreign investment, cites ‘stumbling blocks’

Liberal Party stalwart Senate Minority Leader Franklin Drilon expressed "serious" concerns over the capability of the government to attract new foreign investments.

Citing the latest foreign direct investiment data from the Bangko Sentral ng Pilipinas, Drilon said foreign equity placements other than reinvestments of earnings or new foreign investments decreased by 90.3 percent during the first six months of the year at $141 million from $1.448 billion a year earlier.

“We note from the reports that there is a deceleration in new investment. This is very alarming. Why such a huge drop? Is this an indication of anything?” Drilon said in a statement on Saturday.

“If we are to attract new foreign investment, then it is about time that we take a serious look at how things are going on in our country, because new investment would not come in unless we are able to raise the investors’ confidence level on our country,” the opposition senator added.

The senator raised the issue during the Senate hearing on the proposed budget of the National Economic Development Authority (NEDA).

Sought for comment, Socioeconomic Planning and NEDA Secretary Ernesto Pernia said Drilon's notion is different from international standards.

"He has a different notion of FDI that excludes reinvestment, which should be included according to international definition," Pernia said.

"If so, drop is 14 percent... and the year is not over yet," the country's chief economist said.

Data from the BSP showed that the net inflows of FDI from January to June declined by 14 percent at $3.6 billion from $4.2 billion in the same period last year.

For June alone, FDI expanded by 182.7 percent to $674 million from $238 million a year earlier.

Drilon also cited the 2018 ASEAN Business Outlook Survey by the American Chamber of Commerce in Singapore and the US Chamber of Commerce which revealed that only 22 percent chose the Philippines as a possible expansion location, with Vietnam topping the list at 34 percent.

The Philippines ranked sixth, lagging behind Vietnam, Myanmar at 29 percent, Indonesia at 29 percent, Thailand at 26 percent, and Cambodia at 23 percent.

Drilon said that foreign direct investments would be critical to the country’s economic growth and contributes in providing job and business opportunities.

The senator took note of the current political climate in the country as among the possible “stumbling blocks” that discourage foreign investors.

During the Senate hearing, Senate Committee on Finance chair Loren Legarda relayed NEDA’s explanation that the drop in new foreign investments was caused by some restrictions.

Legarda, however, admitted that she does not agree with it.

“I am told that it is because of certain restrictions. I do not agree with that answer because these restrictions were already there when there was an increase... I cannot create answers if I am not supplied the justification for the decline in the foreign direct investment," Legarda said.

Likewise, Drilon also cautioned the government about the continued depreciation of the peso.

He said that the peso depreciated by an average of 6.5 percent from January to August. He also cited a forecast by some analysts that local unit could weaken to P52.50 :$1 by the end of 2017 and P53.54:$1 by 2018.

“These are facts that are developing that we do hope can be addressed by the economic planners in the best way we can in order not to harm our economy,” Drilon said. — MDM, GMA News