Bold actions on FDI needed to ensure economic recovery

by Louise Maureen Simeon – The Philippine Star, 16 Dec 2021

MANILA, Philippines — The Philippines should incorporate flexibility and revamp its policies on foreign direct investments (FDIs) to ensure economic recovery as capital inflow across the region will still be challenging in the near term.

In its latest Asia-Pacific Trade and Investment Trends, the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) said there is a need for economies in the region to put in place the right conditions to attract, retain and bolster FDI for sustainable development.

Next year, FDIs are expected to remain below pre-pandemic crisis levels in the region.

“All governments will have to work out how to tailor their investment policies so that FDI can be most effectively harnessed to enable economies to get back on the path to sustainable development,” UNESCAP said.

The UN agency emphasized that many economies in the region took advantage of the pandemic to revisit and revise their FDI strategies and investment laws toward sustainable development.

However, UNESCAP said a more concerted effort among the region’s other economies to ensure that FDI is repurposed to target sustainable development priority sectors is still needed.

“As the crisis is still unfolding, the uncertainty that it implies means that a certain degree of flexibility must be incorporated into any and all revamped FDI policies, so that they can evolve and facilitate a sustainable recovery,” it said.

In the Philippines, the government has been pushing for the amendments to the Foreign Investments Act (FIA), Public Service Act, and Retail Trade Liberalization Act.

Changes in these laws would ease restrictions on foreign businesses, introduce changes to the definition of public utilities and allow greater foreign investment in telecommunications and transportation.

It would also reduce the minimum required paid-up capital for foreign retailers. All these three measures have been certified as urgent by President Duterte.

Last week, the Senate and House of Representatives ratified the final version of the measure which harmonizes amendments to the FIA under Senate Bill 1156 and House Bill 300.

Meanwhile, UNESCAP said the coming into force of the Regional Comprehensive Economic Partnership Agreement and the ASEAN Investment Facilitation Framework are expected to help boost more sustainable FDI in the region.

Asia-Pacific remained a top destination for FDIs largely contributed by China and India. The region remains the largest source of global FDI inflows since 2018.