Philippines not preferred for direct foreign investments, says UN

THE Philippines is not considered as top priority host economies for foreign direct investments (FDIs) for the next three years, according to United Nations Conference on Trade and Development (UNCTAD) survey.

In its World Investment Prospects Survey 2010 to 2012, the Philippines was not listed in the top 20 priority host economies for FDIs.

The United Nations (UN) body earlier reported that FDI inflows to the Philippines rose 26.16 percent to $1.95 billion in 2009 from $1.54 billion in 2008. In 2007, the country’s FDI inflows amounted to $2.92 billion.

But the country remained at the bottom in attracting FDIs compared to other countries in the Southeast Asia region. FDI inflows in Thailand were valued at $5.95 billion; Vietnam, $4.5 billion; Indonesia, $4.88 billion; and Singapore, $16.81 billion.

If there is any consolation, Malaysia’s total FDI was $1.38 billion.

Data from the Bangko Sentral ng Pilipinas showed that FDI inflow amounted to $446 million from January to May this year, down by 68 percent from last year’s $1.39 billion.

Vietnam, Indonesia, Thailand and Malaysia were included in the top 20 priority destinations for FDIs.

Other countries included in the survey were China, India, Brazil, US, Mexico, United Kingdom, Germany, Poland, Australia, France, Japan, Canada, Chile, South Africa, Spain and Peru.

UNCTAD said that despite the strong impact of the global financial and economic crisis on transnational corporations (TNCs) investment programs, significant divestment of their foreign assets has not been made, and companies remain committed to expanding their presence abroad.

“In the short-term, the crisis appears to have negatively impacted companies’ investment plans regardless of the home economy,” UNCTAD said.

Growing optimism

The UN agency, however, said that developing-country TNCs are more optimistic in the short-term about the global business environment and their investment prospects than their developed-country counterparts.

It added that this year’s survey revealed slight improvements in the degree of optimism of companies’ perceptions of their business and investment environment that are taking place.

Compared with the 2009 survey, where some 47 percent of respondents expressed pessimistic views regarding their overall business environment for 2010, this year’s survey registers a reduction of respondents with such views, down to 36 percent for 2010.

“Optimism is even more widespread among TNCs when longer-term prospects are considered. While only 13 percent of respondents expressed an optimistic view for the global business environment in 2010, 47 percent did so for 2011 and a solid majority [62 percent] were optimistic for 2012,” UNCTAD said.

The UN agency said that these results suggest that while TNCs are still grappling with the short-term impacts of the crisis, a sizable majority expect the business environment to improve substantially by 2012.

“Respondents tend to express more optimistic views regarding the specific environment for investment in their own company than for the global environment. For instance, as many as 70 percent of respondents are optimistic for their own firm in 2012—roughly 8-percentage points higher than their outlook for the global business situation,” the UN agency added.

UNCTAD estimates the level of FDI inflows in 2011 to reach a range of $1.3 trillion to $1.5 trillion, rising in 2012 to between $1.6 and $2 trillion.

This year’s results are based on the responses of 236 TNCs and 116 investment promotion agencies to an UNCTAD questionnaire. –Darwin G. Amojelar, Senior Reporter, Manila Times