Philippines lags behind other Asean economies: UN

MANILA, July 6 (Bernama) — Despite having glossy economic indicators, the Philippines has lagged behind other member-countries of the Association of Southeast Asian Nations (Asean) in attracting foreign direct investments (FDIs) in the year of 2012, according to a report of the United Nations Conference on Trade and Development (UNCTAD).

The report, released by UNCTAD late last month, showed that the Philippines got a total of US$2.8 billion in FDIs last year, a measly amount compared to those that went into the other top five economies in the region.

Of the total amount of US$111.3 billion in FDIs shared by the Asean 6, Singapore got the biggest chunk of US$56.7 billion, followed by Indonesia with US$19.9 billion, Malaysia with US$10 billion, Thailand with US$8.6 billion, and Vietnam with US$8.3 billion, China’s Xinhua news agency reported.

According to UNCTAD’s World Investment Report 2013, FDI inflows to East Asia and Southeast Asia in 2012 dropped by five per cent to US$326 billion as a result of decline in major economies in the region, including those of China, Hong Kong, Malaysia, and South Korea.

The report said that China continues to be the leading FDI recipient in the region, as well as in the developing world.

FDI inflows to China dropped by only 2 per cent in 2012, remaining high at US$121 billion despite strong downward pressure on FDI in manufacturing caused by rising production costs, weakening export markets, and the relocation of foreign firms to lower-income countries, the report said.

A study made by the global banking giant Citibank said that the Philippines is catching up with its neighbours in attracting FDIs, saying that in fact, the country recorded the highest growth rate of 185 percent as against the 2.11 percent average expansion across the so-called Asean 6 in 2012.

“The Philippines remains the regional FDI laggard but interestingly saw the sharpest year-on-year rise in Asean,” Citibank said in its report.

The Citibank said that the US$2.8 billion in FDIs that the Philippines attracted last year were 185 percent higher than US$981 million that it had in 2011.

Officials here said that with the two investment-grade status that the country received from international credit rating agencies early this year, more FDIs will pour into the Philippines this year.

However, lately there have been some negative economic developments that may affect the overall growth of the Philippine economy this year.

For example, on June 25, the Philippine stock market was pushed officially into the bear market when the Philippine Stock Exchange Index tumbled to 5,789.06, the lowest close since Dec 19.

On June 25, which some analysts called “bloody Tuesday,” the index lost 22 percent from a record 7,392.20 set on May 15, wiping about US$62 billion in value from the stocks.

The stocks, however, have recovered quite well during the last few days closing at 6,500 level in Friday’s trading.

In June, the country’s inflation rate rose to 2.8 percent, which is slightly higher than the 2.6 percent in May.

In a statement released Friday, the National Statistics Office (NSO) said that the average inflation rate for the first semester was 2.9 percent, which is still way below the three to five percent set by the government for this year and next year.

The NSO said that consumer prices rose last month because of the appreciation of the Philippine peso, an increase in the price of oil in the world market, and higher demand for basic items during the opening of classes.

The Bangko Sentral ng Pilipinas (BSP), the country’s central bank, also reported on Friday that the gross international reserves (GIR) of the Philippines dipped to a 10-month low of US$81.6 billion in June.

Data released by the BSP showed that June marked the third consecutive month that the GIR went down. The GIR peaked at US$83.95 billion in March before falling to US$83.21 billion in April, to US$81.96 billion in May and to US$81.6 billion last month.

The BSP said that the decline in the foreign exchange reserves was due to the lower price of gold in the international market and the payment by the national government of its dollar-denominated maturing obligations.

Despite these not-so-encouraging developments, the government is still confident that it can achieve its target of six to seven percent growth this year. — BERNAMA