By Beting Laygo Dolor, Contributing Editor
Contrary to what administration drumbeaters have been claiming, foreign investors are not flocking to the Philippines. If anything, they may be avoiding the country in favor of other nations in the region perceived as being more economically and politically stable.
Foreign direct investments (FDIs) sank by a whopping 20 percent in the first half of 2023 compared to the same period last year.
The latest figures from the Bangko Sentral ng Pilipinas (BSP, the Philippines’s central bank) stated that FDIs had fallen to US$3.9 billion in the first semester, following inflows sinking to a five-month low in June.
The Central Bank said the decline was mostly due to investor concerns over weak growth prospects in the Philippines, coupled with persistent global uncertainties.
The top sources of FDIs in the first half of the current year were Japan, Germany, the US, and Singapore.
The President spent nearly a week in Singapore, which he erroneously said earlier this month was the top source of investments for the country, as well as loans.
As he has done in the more than a dozen foreign trips since becoming president last year, President Ferdinand Marcos Jr again went to Singapore not only to attend the annual ASEAN Leaders’ meeting but also to meet with the business community there in order to try and invite more investments.
He also attended the Formula One Singapore Grand Prix 2023, ostensibly upon the “invitation of the prime minister.”
He attended the same event last year, and again drew flack in absentia through the rice shortage and rising oil price crisis.
First Lady Liza Marcos stood by her husband, saying the race was also “an opportunity to network” with some of the world’s biggest business leaders.
The President arrived home over the weekend, again stating that he had received millions of dollars in “pledges.”
The actual fresh investments that came in this year went mostly to manufacturing at 54 percent, real estate at 15 percent, and financial services and insurance at 10 percent.
It was in debt instruments that investments had the sharpest drop of 24 percent, from US$3.59 billion in the first semester last year to only US$2.7 billion for the same period this year.
Total reinvestments of earnings also took a double digit fall down to US$459 million in 2023.
June proved to be another tough month yet, with net inflows sliding by 3.9 percent to US$484 million, the second lowest for the year. In January, net inflows were at US$465 million.
Because of the unexpected slowing down of FDIs this year, the BSP lowered its projections for inflows. The Central Bank now expects FDIs this year to hit only US$9 billion, from an earlier projection of US$11 billion.
The BSP however, predicts FDIs to jump to US$11 billion next year.
In another development portending tougher times ahead, the Philippine peso has been steadily falling in the past few weeks.
The local currency started this week at PHP56.866 to $1 US dollar, even as the Philippine Stock Exchange (PSE) continued its downward slide to the 6,124.57 level.
The PSE is where foreign investors can also place their funds, which is preferred by some as it is easier to pull out at short notice. Known as “hot money,” these are less preferred than longer term investments which indicate trust in the mid- to long-term prospects of a nation’s economy.
