Phl had lowest FDI inflow in SEA in 2012

MANILA, Philippines – The Philippines had the lowest inflow of foreign direct investments (FDIs) in the East Asia and Pacific region last year, a unit of the World Bank said.

In 2012, the Philippines drew in $2.8 billion worth of FDI, the lowest in the region that includes China, Indonesia, Malaysia, Thailand and Vietnam.

Based on the World Investment and Political Risk (WIPR) 2013 report published by the Multilateral Investment Guarantee Agency (MIGA), the Philippines is the least attractive destination for foreign investments during the survey period from 2004 to 2012.

MIGA is a member of the World Bank Group, with the promotion of FDI into developing countries to help support economic growth and reduce poverty as its main mission.

Last year, total inflows in the region amounted to $313.7 billion. The highest during the review period was in 2011 when it hit a record $339.9 billion.

Phl has China led the region with inflows of $253.5 billion in 2012, slightly easing from $280.1 billion in 2011.

Indonesia was the second best magnet for FDIs with $19.6 billion, from just $1.9 billion in 2004.

Thailand recorded FDI inflows last year of $10.7 billion, its highest in the nine-year review period.

Malaysia also recorded its best inflows in 2011 reaching $15.1 billion, settling to $9.7 billion in 2012.

In 2004, Vietnam attracted $1.6 billion in foreign investments, before hitting a record $9.6 billion in 2008 and tapering to $8.4 billion last year.

Meanwhile, the MIGA report said foreign investors have been increasingly cautious about investing in developing countries in the face of continued global economic and political turbulence.

The report indicated that macroeconomic instability and political risk rank neck-and-neck as top concerns for investors as they plan over the short and medium terms.

Others major concerns are: access to qualified staff; corruption; infrastructure capacity; limited market opportunities; and increased government regulation in the aftermath of the global financial crisis.

A survey conducted for the report finds that nearly half of respondents expect to increase their investments in developing countries over the next 12 months — with that number increasing to 70 percent when extended for three years.

“The continued level of investor caution has been a boon for the political risk insurance (PRI) industry. The dramatic increase in political risk insurance issuance of recent years has continued, rising 33 percent in 2012 and on track for similar growth in 2013,” it said.

Political risk insurance issuance has once again exceeded the pace of increase in FDI flows into developing economies over the same period.

The ratio of FDI to PRI now stands at 14.2 percent for developing economies, a marked increase on the low-water mark of nearly five percent in 1997.

The study finds the risk appears to be higher in middle income countries than lower income ones. The Philippines is ranked among the middle income nations in the region. –Ted P. Torres (The Philippine Star)