EDITORIAL - Still a laggard

Southeast Asia’s fastest growing economy also posted the biggest growth in foreign direct investment last year. The latest World Investment Report prepared by the United Nations Conference on Trade and Development showed that FDI grew by 24 percent in the Philippines in 2013.

That was larger than the 19 percent growth posted by Malaysia, Indonesia’s 17 percent and Singapore’s five percent. FDI was flat in Vietnam while it contracted by 12 percent in Thailand amid the political turbulence.

In terms of value of investments, however, the Philippines received the lowest FDI in the region, netting $3.9 billion. That was paltry compared to Thailand, which attracted $12.95 billion in FDI, according to the UNCTAD report. Tiny Singapore remained the investors’ regional favorite, drawing a whopping $63.77 billion in FDI. Indonesia followed with $18.44 billion and then Thailand. Malaysia drew $12.31 billion while Vietnam got $8.9 billion.

UNCTAD’s report, whose theme is “investing in the sustainable development goals,” noted that 54 percent of global FDI last year, or about $778 billion, went to developing countries. With that figure, the Philippines’ $3.9 billion was just a drop in the bucket.

Analysts have cited the Philippines’ renewed growth trajectory, and the country remains one of the best economic performers in Asia. Business confidence is still high, so the government should determine what is preventing this confidence – plus the country’s investment grade – from translating into significant levels of investment.

The administration has often said that it wants economic growth – the second fastest in Asia – to be inclusive. One way of achieving this is by creating meaningful jobs, which can be generated by significant levels of investment.

For several years now, business groups have submitted long lists of recommendations to the government for making the nation more investment-friendly. The country is not lacking in models; it’s in a neighborhood full of competitive economies. Yet the Philippines continues to lag behind the region’s strongest economies in terms of FDI. The UNCTAD report should spur more urgent action to remove the country’s tag as a regional laggard in investment.