DOF official allays concerns over FDI drop

MANILA, Philippines – While foreign direct investments (FDI) were lower in the first 10 months last year, those channeled to the manufacturing sector are rising and are bound to go up further, a top finance official said.

In an economic bulletin, Finance Undersecretary and chief economist Gil Beltran said the drop in FDI last year should not be a cause of concern.

“The small decline in 2015 may just be a blip considering that FDI has been rising 53.1 percent annually for three years, 2012 to 2014,” Beltran said.

FDI recorded a net inflow of $4.98 billion from January to October last year, down 4.9 percent year-on-year, central bank data showed.

A net inflow indicates more investments coming in than going out.

More opportunities are ahead however, as FDI in manufacturing – the sector being revived by the government for its job-creating capacities – more than tripled during the same period.

The trend also trickles down to the financial sector due to Republic Act 10641 that allowed more foreign banks to operate in the country, Beltran said.

“The robust rise in FDI for manufacturing and financial sector is due to the launching of two new reform programs-- Manufacturing Resurgence Program (MRP) and the bank liberalization law,” he explained.

“These sectors will undergo further expansion in the quarters ahead,” Beltran said.

According to central bank figures, manufacturing FDI went up 155 percent to P624.54 billion as of October, accounting for the biggest share of inflows at 12.5 percent.

FDI on financial services, meanwhile, hit P531.84 million, narrowing its decline to 28.4 percent. They cornered 10.7 percent of total inflows during the period.

Launched in 2014, the Aquino administration’s MRP introduced a three-phase approach to boost capacities and expand the manufacturing sector until 2025.

The program includes rebuilding capacities, shifting to high-value products and deepening regional and global production network as strategies toward a “competitive” manufacturing sector.

Beltran said other industries with small FDI participation-- such as transportation and utilities – should mimic reforms in manufacturing to expand further.

“Sectors with small FDI presence have significant growth opportunities,” he said.