By Bianca Cuaresma,
https://businessmirror.com.ph/2019/07/31/bsp-manufacturing-gets-1-3-of-fdi/
Image Credit to Business Mirror
THE manufacturing sector continued to get the lion’s share of the gross foreign direct investments (FDI) channeled to the Philippines in the first four months of the year, according to data from the Bangko Sentral ng Pilipinas (BSP).
Of the $2.9 billion FDI that flowed into the Philippines in January to April, the manufacturing sector received one-third, or 33.51 percent. Other recipients of large FDI are the transportation and storage sector with 28.84 percent; financial and insurance services, 26.52 percent; and real-estate activities, 26.16 percent.
FDI is the type of investment that is often more coveted, as it stays longer in the economy and creates job opportunities for locals. These investments are also usually an indicator of long-term sentiment of the global community regarding the country’s economy as FDI are not easily pulled out of the market, unlike its shorter-term counterpart, the foreign portfolio investments.
In contrast to manufacturing, agriculture, education and human health and social work activities attracted few foreign investments, and accounted for only less than 2 percent of gross FDI during the period.
In terms of growth, however, FDI to the manufacturing sector were down by 78 percent from last year’s record. The decline was offset by the strong growth in FDI obtained by the transportation and storage sector, administrative and support service activities, and the information and communications sector.
Earlier this month, the BSP reported a 14-percent decline in the country’s FDI. Total net FDI inflow in the first four months of the year dropped by about $500 million to $2.9 billion, from last year’s $3.4 billion.
Recovery
Some economists, however, believe that the country’s FDI numbers are set to recover by the last quarter of the year.
Rizal Commercial Banking Corp. (RCBC) Head of Economics & Industry Research Team Michael Ricafort, for instance, said the low interest rate regime in the country, as well as the recent S&P Global rating upgrade given to the Philippines, will be positive for the country’s image in the international investing
community.
“S&P upgraded the Philippine credit ratings by one notch to BBB+, two notches above the minimum investment grade. This reflects improved international investor sentiment/confidence on the Philippines, and may increase the inflows of foreign direct investments into the country,” the RCBC economic team said.
“If the United States-China trade war lingers or worsens, some FDI may be redirected from China to Asean countries, such as the Philippines, to avoid higher tariffs on US imports from China,” it added.