Why are foreign investments not coming to the Philippines?

Contrary to the billions upon billions in Foreign Direct Investments (FDI) promised by the president whenever he makes an arrival speech from his more than 12 foreign trips in the last 12 months, the investors are not coming. Many current investors are folding up and transferring to Thailand, Vietnam, Indonesia, Singapore, and Malaysia. Why? Bad governance and reports of corruption, unstable economic and investment policies, bad weather and crimes.

Economic figures do not lie. Only politicians do. The economic technocrats reported that net FDI in the Philippines slumped by 30.7% year-on-year to $0.55 billion in March 2023, due to declines in net inflows across all major FDI components amid investor concerns over subdued global growth prospects. Net debt instruments plunged by 37.2% year-on-year to $0.39 billion (vs. $0.62 billion in March 2022), while reinvestment of earnings edged down 0.1% to $0.06 billion. Also, equity capital dropped by 11.7% to $0.9 billion (vs. $0.11 billion). The largest sources of funds were Singapore, Japan, and the US. These were invested largely in manufacturing; information and communication; and real estate industries. Considering the first quarter of the year, net inflows shrank 19.6% year-on-year to $2.0 billion, as foreign investors remained cautious amid persistent and broadening global inflation.

Indeed, one cannot argue against hard facts. The evidence shows that FDI in the Philippines fell by 14.1% year-on-year to $0.9 billion in April 2023 amid investor concerns over slowing economic growth and relatively high inflation levels globally. Indeed, official reports indicate the sad truth: Net FDI in the Philippines slumped by 34.0% year-on-year to $0.5 billion in May 2023 due to higher price and interest rate levels globally. Net debt instruments plunged by 70.7% year-on-year to $0.16 billion (vs. $0.55 billion in May 2022), while reinvestment of earnings fell 5.4% to $0.09 billion. The president's economic team must do something draconian and earth-shaking in order to address these very bad trends.

The prophets of bloom in the government's economic team would love to regale us with glowing statistics which are mere projections and guesses. The fact is that the Philippines has a national debt of ?14 trillion and still counting. That national appropriation act for 2024 is ?5.768 trillion which is another plan for deficit spending. Half of that budget will be funded by more borrowings, and once released to the agencies, a big slice of public funds will go to the pockets of the corrupt trapos and their favored contractors and suppliers. That is the SOP in the Philippines.

Small businesses are being killed by too many inspections. Outsourcing is being treated as if it is a pandemic virus. Government never stops legislating more taxes. It takes forever to open a new business in this country. The weather is uncertain. The police shoot innocent teenagers. Traffic is horrendous. Crime is on the upsurge.

These are the reasons why FDI would rather go to communist Vietnam or the business-friendly Thailand, Malaysia, Indonesia, and Singapore. You do not need a doctorate in Economics from Harvard to figure that out.