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Why are we behind in foreign investments?

EDITORIAL

Published

E CARTOON JUN 18, 2019In so many ways, we are doing well in our economic development.  In one area, however,  we are  behind  our neighbors  in Southeast Asia. This is in the area of Foreign Direct Investments (FDI) – the  amounts  foreign  nations and international organizations  invest  in our economic development  programs.

 The World Investment  Report of the United Nations Conference on Trade  and Development   (UNCTAD) for 2019,  which  it released last  Wednesday,   said  FDI  in the Philippines in 2018 totalled  $6.45 billion. It was down from the 2017 figure of $8.7 billion.

In contrast, our neighbor to the south,  Indonesia,  had  $22 billion  in  foreign investments in 2018, more than three times that of the Philippines. Thailand had $10 billion.

The  Philippines’  $6.45-billion FDI in 2018  constituted only 4 percent of the total received by all Southeast Asian nations — $148.69 billion.  Our  FDI  went down by 26 percent from last year, at a time when the total FDI for Southeast Asia went up by 3 percent.

All nations welcome foreign investments as these are additional resources  that create or enhance economic activities. Even the United States, the  world’s most advanced economy today, welcomed $253.2 billion  in FDIs  in 2017. China today rivals the US in getting FDIs  from investors  around  the world.

In the Philippines, we have several government agencies promoting FDIs, led by the Board  of Investments (BOI), the Clark Development Corporation  (CDC), the Philippine Export Economic Zone Authority (PEZA),   and the Subic Bay Metropolitan  Authority.(SBMA).

In many parts of the country today, we have PEZA zones where many foreign  firms operate, providing employment  to millions of Filipinos. We also have Business Processing Offices (BPO) maintained by foreign  firms, manned by capable Filipino workers fluent in English. Then,  of  course, we have  millions of Overseas Filipino Workers  (OFWs) all over the world.   All these are part of the way our country, with its limited financial resources,  is earning  dollars,  euros, and other foreign exchange, which  it  uses  for its economic development.

Foreign Direct  Investments  are  an important part of these international  resources. We thus need  to  determine  why the Philippines is way behind  other  Southeast  Asian  nations  in attracting these international  development funds.

After the first  tax  program – the TRAIN Law – went into effect last year, the Department  of Finance is now preparing  a Package 2 to lower the corporate income tax and modernize fiscal  incentives, a Package 3  to reform the property evaluation system, and a  Package 4 to rationalize  capital income taxation.

As we institute these reforms to maximize the raising of funds from local sources, let us also take steps to maximize the help provided by Foreign Direct Investments. Surely  we  have  resources that should  attract   more foreign investors to  our country.

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