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The Philippines’ government has been pushed to open up to greater foreign investment.
MANILA, Philippines — The Philippines should open up even more to foreigners if it wants to attract more job-creating investments, according to the Asia-based Hinrich Foundation.
In an online forum arranged by Hinrich, Riccardo Crescenzi, professor of economic geography at the London School of Economics, said there is a “window of opportunity that might be the right moment to open the country.”
Crescenzi did not say when this opportunity would arise, or what this window would entail, allowing the economy to be more accessible to international investors. The Philippines has been lagging behind its regional neighbors in luring FDI for years, owing to its aging infrastructure.
Following a record-high net inflow of $10.1 billion in 2017, data showed that FDI to the Philippines began to decline from that high point, with the pandemic exacerbating the downward trend.
FDI net inflows touched an all-time high of $10.5 billion last year, despite virus outbreaks around the world. Meanwhile, the outgoing Duterte administration managed to force through legislation easing limitations on foreign investment at the last minute.
Crescenzi and Oliver Harman, a cities economist at the University of Oxford’s International Growth Centre, co-authored a study commissioned by the Hinrich Foundation that looked into several ways countries could exploit FDIs and global value chains.
For Harman, the Philippines has seen “outward and inward” FDI, in which a country invests abroad and then brings back lessons learned from that investment.
The Philippines, along with Cambodia, Indonesia, Thailand, and Vietnam, rely on their regional neighbors for “inward” investments, according to the study. At the same time, this same group of countries invested in East and Southeast Asia, a sort of “outward” FDI that, according to the researchers, might bring in fresh knowledge that helps with economic development.
“There’s a lot of temptation to look within and engage in economic resiliency initiatives.” “It’s critical for economies to remain open in the long run,” Harman added.
Harman believes that in the next years, opening up the Philippines to the rest of the globe will be easier, noting the local call center industry, which has prospered in areas outside of the city. Towns like Baguio and Bacolod, he added, were able to attract BPO investments because they understood the industry’s demands and identified regional assets with which the two cities could partner.
“Attracting FDI necessitates taking into account actions at smaller geographic scales.” It also serves as a reminder to policymakers that, while regional assets take a long time to transform, local institutions can quickly match existing ties to global networks, according to the researchers.