A Better Growth through FDI

The Philippines’ growing middle class, strong domestic demand, and stable political environment, paired with gross domestic product (GDP) growth of 7.2% in 2013 make the country an increasingly attractive destination for Foreign Direct Investment (FDI). FDI rose in 2013 and is expected to continue with the Government of the Philippines (GPH) emphasizing job creation and inclusive economic growth. Thanks to a relatively large, educated, English-speaking workforce, the Business Processing Outsourcing (BPO) and tourism industries have experienced growth in recent years and these trends are likely to continue. Under the administration of President Benigno Aquino, the Philippines has implemented reforms to improve the investment climate, making strides in good governance, transparency, and accountability.

Restrictions on foreign ownership rules, poor infrastructure, and corruption continue to be significant concerns for investors. Strengthening the rule of law is important as a complex and slow judicial system inhibits the timely and fair resolution of commercial disputes. In general, the Philippines lags behind its Asian neighbors in attracting foreign direct investment (FDI) because many sectors of the economy are limited to foreign investment. The Philippines has recently liberalized some of its industries to stimulate investments, specifically infrastructure, insurance, banking, telecommunications, and power industries. Invest Philippines is the GPH’s network of investment promotion agencies. [1]

According to present reports about the Philippine economic update, it is transparent that the country’s economy has strong growth in the past two years despite of its slow start in the first quarter of 2014. Over the years, our good foreign relation is one of the leverage to this development and it helped a lot in uplifting the Filipino lives and reducing poverty. Currently, the Philippines will be hosting on ASEAN PPP guidelines. The Association of Southeast Asian Nations (ASEAN) aims to harmonize the principles on the Public-Private Partnership (PPP) to further improve the economic assimilation and worldwide competitiveness of the region. Our active participation will be an avenue to the better growth of our nation with the help of other countries. This indicates that progress is at work.

However, there are still confined problems that hinder the full progression of advancement. World Bank says, “Philippines can sustain high growth by accelerating structural reforms and increasing investments in infrastructure and in the health and education of the Filipino people.” Also, the slow pacing of our judicial system and the classic problem of our country, corruption, clogs the way to successfully gain from the prospects in our investment sector. These are aspects that should be given more attention by the government. We have all the opportunity to step forward and to be a rich country, not just in monetary terms, but also to have educated and skilled people who will lead us to achievement as a country. The executive summary of 2014 Investment Climate Statement stated that investors generally report that Philippines bureaucracy is non-discriminatory, but describe business registration and procedures as slow and burdensome. Overall, however, the climate of the Philippines has improved. If the country can maintain its reform momentum, its prospects for investment will continue to brighten.

[1] 2014 Investment Climate Statement, Bureau of Economic and Business Affairs, June 2014 Report at m.state.gov/md226859