Government urged to do more to attract foreign investors

MANILA, Philippines - The National Economic and Development Authority (NEDA) urged the government to exert more effort to attract investors, saying that the global financial crisis has slowed down foreign direct investments coming into the country.

Dennis Arroyo, director of NEDA’s National Policy and Planning Staff (NPPS), said the government needs to work more to make the Philippines more conducive for businesses.

“We have to work double time in addressing the negatives, that is why investors do not easily pick the Philippines,” Arroyo said during the press launch of the World Investment Report (WIR) 2009 of the United Nations Conference on Trade and Development (UNCTAD) last week.

He noted that investors have had the same concerns as they have in the past, including ease of doing business, corruption and governance, high cost of utilities like power, infrastructure and peace and order.

At the same time, Arroyo warned that “shocking events or news” turn off investors and dampen their interest.

“We must address these issues,” he noted.

Arroyo, who was also the presenter of the WIR, said that sectors driving growth in the next couple of years, which investors could also look into, are business process outsourcing (BPO), mining, tourism and renewable energy.

“The BPO sector continues to grow and has been resilient. There is a high global demand in the mining sector as seen in the higher prices of metals around the world. In tourism, we have the natural attractions. Now, we are spending on infrastructure in the Central Philippines region. It is also good to invest in renewables because of the passage of the law on renewable energy. We see more investments coming in at least in biofuels. I want to see investments in ocean wave power. As an archipelago we have access to a long coast line, so we should be investing more in wave power,” Arroyo said.

Meanwhile, in the WIR that he presented, Arroyo reported that the current crisis prompted the global slowdown in FDIs.

“Global FDI flows have been severely affected worldwide by the economic and financial crisis. After falling 14 percent in 2008 to $1.7 trillion, they are expected to fall further to below $1.2 trillion in 2009, recover slowly in 2010 and gain momentum in 2011,” he said.

The value of cross-border mergers and acquisitions (M&As) declined by 35 percent in 2008 to $673 billion. Greenfield investments, he added, were strong in 2008 (reaching 15,551 deals), though their number fell sharply in early 2009.

Cross-border M&As are defined as the joining of two firms or the takeover of one firm by another when the parties involved are based in different national economies.