AmCham warns of ‘dark cloud on the horizon’ for new investments

MANILA, Philippines — The American Chamber of Commerce of the Philippines (AmCham) said yesterday it is pleased with the record foreign direct investment (FDI) inflows in 2017, but warned of a  possible “dark cloud on the horizon” in terms of new investments.

In a statement, AmCham said last year’s net FDI is a great progress from 2010 when the group advocated for an annual FDI target of $7.5 billion after 2009’s net FDI hit $2.04 billion.

The Bangko Sentral Pilipinas (BSP) announced last Monday that net FDI in 2017 hit an all-time high of $10.1 billion. 

 “With a total FDI in 2017 exceeding $10 billion, the Philippines has attained a level close to those fast-growing ASEAN economies have enjoyed for many years,” AmCham said.

According to the group, the Philippines should be able to attract even higher levels of FDI in future years with its enormous potential.

AmCham said the reforms being made by the government to reduce restrictions on foreign investment should attract more foreign investments.

However, the group said new investments may be weakening as indicated by recent data from the Philippine Economic Zone Authority (PEZA) and the Board of Investments (BOI).

Citing data from PEZA in 2017, AmCham said the manufacturing component of approved investments decreased 46 percent year-on-year, while the information technology component declined by 49 percent.

It said data from the BOI, meanwhile, showed that approved foreign investments in the fourth quarter of 2017 reached only P22 billion, the lowest in eight years, while domestic firm applications registered a record level.

 “Since the PEZA and BOI data predicts future FDI inflows, this data, unless reversed, could indicate a dark cloud on the horizon,” AmCham said.

“According to the BSP, 60 percent of the 2017 total was comprised of intercompany borrowings. This appears to indicate that existing investors familiar with the country are expanding operations. We expect this trend to continue so long as high GDP growth is maintained, and we hope that the 30 percent classified as equity is going into new investments,” it added.

AmCham said another reform that would support increased foreign investments in the country would be the lifting of the six-year old moratorium on new mining production projects to allow responsible mining activity.