NextGen Day

Even as the number of cases of coronavirus disease 2019 (Covid-19) rises, an economist predicts continued improvement in foreign direct investments (FDIs) to the Philippines as economic and credit fundamentals improve.

The Bangko Sentral ng Pilipinas (BSP) announced a 98 percent year-on-year increase in net FDIs to USD855 million in October 2021, the fifth consecutive month of growth, bringing net FDI inflows to USD8.1 billion in the first ten months of the year.

“As the economy reopens further from the lockdowns earlier in 2021, FDIs remains one of the bright spots for the Philippine economy, in view of their continued double-digit growth rates in recent months, alongside near-record highs in exports, imports, OFW (overseas Filipino workers) remittances, as well as manufacturing gauge among pre-pandemic highs,” Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said in

According to Ricafort, demographics, the acceleration of the vaccination program, including booster shots against Covid-19, and the implementation of the Alert Level System, which is “considered a de facto reopening of the economy with the shift towards smaller-scale/granular lockdowns,” are expected to boost FDI inflows.

He also mentioned the CREATE (Corporate Recovery and Tax Incentives for Enterprises) law, the country’s record-low interest rate, and the country’s investment-grade ratings being reaffirmed.

“Better economic recovery prospects and higher infrastructure expenditure to pump-prime/stimulate the economy, as well as preparations for the May 2022 elections,” he added.

According to Ricafort, global economic prospects are bright since several industrialized countries, which are a major source of FDI to the Philippines, are working to achieve population protection.

FDIs, he said, is one of the pillars of a country’s economic recovery plan since they “generate more jobs/employment and other business/economic activity in the country.”

“The necessity for some multinational/global corporations to better hedge their worldwide supply chains will lead to more FDIs locating in the country as an appealing market and accessing the country’s free trade agreement (FTA) partner countries in the Asia Pacific area,” he said.

According to Ricafort, FDI will expand much more if the country joins the Regional Comprehensive Economic Partnership (RCEP).

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