New Investment flow to the Philippines for this year will be driven by the prevailing low borrowing cost environment, and cross-border merger and acquisitions, according to the market outlook of online brokerage firm 2TradeAsia.com.
“Higher local currency translation, thrusts to expand markets and streamline supply chain management via business process outsourcing [BPO] are likely to be key drivers for continued foreign direct investment [FDI] inflows in favor of Asia,” 2TradeAsia said.
The report also said that among key strengths of the Philippines are availability of low-cost labor and presence of natural resources especially for agriculture and infrastructure requirements.
“Additional support may also stem from efforts to promote extractive industries [e.g., mining, petroleum and gas exploration, cement/quarrying] as well as those in utilities [water and electricity] and infrastructure undertakings,” the report said.
2TradeAsia.com cited that in the United Nations Conference on Trade and Development report, East and Southeast Asia’s foreign direct investment (FDI) inflows reached $336 billion, or 22 percent of aggregate global inflows.
Specifically, Southeast Asia registered $117 billion in FDI inflows.
The online brokerage firm also cited that the Philippine market will be highlighted with enhancers from multilateral accords.
“The above is anticipated to be enhanced with 2012’s trilateral investment accord between China, Japan and the Republic of Korea, which is expected to parallel the North American Free Trade Agreement [Nafta]. This would also help expand Asean plus [including China, Australia, New Zealand and India],” it added.
Asean is the Association of Southeast Asian Nations.
Support for faster gross domestic product (GDP) is also seen in 2013.
2TradeAsia.com said that from an estimated 6.5 percent GDP growth for 2012, the economy will continue to be supported in 2013 by the services industry (which comprised 54.4 percent of GDP in 2011), specifically trade, real estate, transportation, storage and communication sub-components.
The wildcard would still be agriculture (12.3 percent of GDP), which faces challenges from volatile weather conditions, the online brokerage firm added.
“For the demand side, improved household and government spending would help fuel expansion to 7 percent to 8 percent for 2013, especially with local elections in the initial semester of the year,” 2TradeAsia.com said.
Consumer spending will be aided by moderate inflation, plus the influx of remittances from overseas Filipino workers. –Madelaine B. Miraflor, Manila Times
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