Foreign direct investments plunge 38.6% to $857.8M

Foreign direct investments took a 38.65-percent plunge in 2001 in the wake of a weakening global economy.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that foreign direct equity investments for the whole year dropped by $540.4 million from $1.398 billion in 2000 to only $857.8 million despite the considerable increase in direct investments coming from Japan.

According to the BSP, the decade-long economic recession in Japan actually benefited the Philippines as Japanese investors moved out of their country to avoid rising costs.

This led to an impressive 92.5-percent increase in Japanese FDI into the Philippines from $100.17 million in 2000 to $192.83 million Japanese investors were lured mainly by lower operating costs in the country.

Japan was the country’s top foreign investor, followed by the US whose investments dropped by 21.41 percent last year to $245.32 million. This amount accounted for 22.46 percent of total FDI inflow.

US investments into the Philippines are expected to continue dropping this year as the US government repeatedly branded the country as part of the so-called "axis of evil".

This has prompted the Arroyo Administration to protest being branded as supporting terrorism and forced it to allow US troops back into the country ostensibly to train the local army in the art of slaughtering Islamic radicals.

The widespread pessimism among businessmen, however, spread out even to the country’s Asian neighbors who held back on their investments.

Singapore remained the third largest source of FDI but it has trimmed its exposure by about 46.56 percent from $169.77 million to $151.56 million.

Direct equity from the Netherlands and Taiwan were the fourth and fifth biggest inflow at $132 million and $48.88 million respectively.

However, unlike the FDI from the Netherlands which declined by 22.08 percent compared to the previous year, investments from Taiwan actually increased from only $1.41 million in 2001.

By industry, the bulk of FDIs went to banks and other financial institutions which lured in $476 million, followed by manufacturing which got $262. 87 million and mining which accounted for $66 million.

In manufacturing, non-metallic mineral products were the favorite destination, followed by machinery, appliances and supplies; metal and metal products.