Foreign investors remain optimistic about the Philippines despite a continued slump in net inflows, economic managers said.
Finance Secretary Carlos Dominguez 3rd claimed that President Rodrigo Duterte’s foreign visits, in particular, had generated about $59.3 billion in economic benefits for the country.
“The trips resulted in various deals such as $37 billion worth of investment pledges between business to business through the signing of memorandum of understanding/letter of intents,” he told reporters.
Dominguez added that the presidential trips also raised $18 billion in official development assistance and $4.3 billion in trade.
Duterte has so far visited countries such as Indonesia, Vietnam, Brunei, China, Japan, Malaysia, Cambodia, Singapore, Myanmar, Thailand, Saudi Arabia, Bahrain, Qatar and Russia.
Socioeconomic Planning Secretary Ernesto Pernia, meanwhile, said that foreign equity placements, which Senate minority leader Franklin Drilon pointed out as a source of concern, were only a component of total foreign direct investments (FDI).
“Senator Drilon narrowly looks at so-called ‘new’ FDIs only,” Pernia said.
“[W]ith reinvestments reckoned as well, drop in total FDIs was only 14 percent by [the end of the]second quarter, not 90 percent [as claimed by the senator],” he added.
Pernia said reinvestments were just as good as an expansion of operations and also create.
Drilon last week expressed concerns over “a deceleration in the influx of new investments” during a hearing on the National Economic and Development Authority’s (NEDA) 2018 budget.
Citing Bangko Sentral ng Pilipinas (BSP) data released last month, Drilon said there was a 90.3 percent decrease in foreign equity placements to just $141 million in the first half from $1.448 billion in the same period last year.
“This is very alarming. Why such a huge drop? Is this an indication of anything?” Drilon asked.
While net FDI grew by 182.7 percent in June from a year earlier, the six-month tally of $3.59 billion was down 14 percent compared to the same period in 2016.
On Tuesday, meanwhile, the BSP reported that net FDI for July had slumped to the lowest level in over a year on the back of a steep drop in funds channeled into debt instruments.
At $307 million, the net FDI inflow for the month was 37.9 percent lower compared to July last year and was also the smallest since June 2016’s $238 million.
July’s slump weighed on net FDI flows for the first seven months of 2017, which fell by 16.5 percent — steeper compared to the first semester slump — to $3.9 billion from a year earlier.
Net equity capital, at $131 million in July, rebounded with a 470 percent growth from the $23 million posted a year earlier.