MANILA – The Department of Finance (DOF) on Wednesday brushed off the decline in foreign direct investments (FDI) into the country last year as a mere “temporary phenomenon.”
On Monday, the Bangko Sentral ng Pilipinas (BSP) revealed that FDI posted a net inflow of $9.8 billion, down 4.4 percent from $10.3 billion in 2017.
It also fell short of central bank’s forecast of $10.4 billion.
For DOF, however, the drop in FDI – investments made by foreign companies or individuals in the Philippines – is “just a temporary phenomenon brought about by the uncertain world economic environment.”
“FDI flows will recover when world conditions are better,” the Finance department said in its Economic Bulletin.
“The FDI decline in the Philippines in 2018 mirrors the global FDI decline during the past two years,” it said.
The DOF noted that global FDI dropped 6.5 percent to $1.9 trillion in 2017, while in the first half of 2018 it declined by a heftier 44 percent to only $432 billion.
“This is due to slowdown in the world economy brought about by US-China trade war, Brexit, and slowdown in worldwide growth,” it said.
The government, it said, should implement reforms for a better investment environment.
“More red tape should be drastically cut. In this regard, TradeNet.ph, among other digital infrastructure, should already be implemented. This will facilitate exports of manufactures,” the DOF said.
“Foreign ownership restrictions should be eased. The Philippines has one of the most restrictive investment regimes in Asia. For example, the Public Service Act (PSA) should be amended to redefine public utilities and enhance competition to bring down costs,” it added. (GMA News)
