Foreign business groups in the Philippines are optimistic the country’s net foreign direct investments (FDI) will pick up in the second half of the year as investors regain confidence along with easing port congestion problems.
In a statement yesterday, the Joint Foreign Chambers (JFC) said it remained concerned over the country’s diminishing net FDI but said it is hopeful that the decline during the first half of the year is only temporary and the second half will register higher levels.
The JFC said the Philippines has now managed to regain investor confidence after successfully hurdling congestion concerns that have crippled trade and scared away new investments late last year and early this year.
“We understand that local managers of existing investor projects have gradually been able to restore the confidence of their headquarters that the congestion issue has been resolved under strong leadership from the Office of the President,” the JFC said.
According to the foreign business groups, Philippine Economic Zone Authority (PEZA) officials have reported caution in the first half of 2015 among investors concerned about the efficiency of their logistic chain as a result of the severe port congestion experienced in late 2014 and early 2015 caused by trucking restrictions.
“Thus, more expansion projects by existing PEZA investors are expected in the second half of 2015 and hopefully new greenfield projects under consideration will also move forward,” the JFC said.
PEZA is regarded as the country’s main investment promotion agency with the highest FDI inflows, with 60 percent of yearly approvals consisting of expansion projects by existing investors while the remaining 40 percent are greenfield investments.
To ensure continued investor confidence in the country, the JFC urges the government to make sure there will be no recurrence of port congestion caused by truck bans as well as no brownouts during the 2016 dry season.
Likewise, the JFC said the government needs to continue to award major public-private partnership infrastructure projects and accelerate their implementation while reducing traffic congestion in Metro Manila and decreasing flight delays at NAIA.
Net FDI inflow in the Philippines during the first half of 2015 stood at $2 billion, 40 percent lower from $3.4 billion in the same period last year.
The JFC said the decline follows a record year in 2014 when the country’s total net FDI reached $6.2 billion, a 479 per- cent growth from $1.1 billion in 2010.
“While FDI has slowed down in the first half of 2015, it still is at a pace much higher than five years ago, although even in 2015 it was only 4.6 percent of total FDI in Asean. The challenge is to increase FDI in the second half of the year and thereafter to even higher levels important for high, sustained, and inclusive growth,” the JFC said.
The JFC said the passing into law of certain legislative measures such as the Apprenticeship Act amendments, the BOT Act amendments, the Customs Modernization and Tariffs Act, the creation of a Department of Information and Communications Technology, the Foreign Investment Negative List amendments, the Freedom of Information Act, and the Right-of-Way Law amendments would help beef up FDI in- flows to the country.
The group is like- wise calling for sup- port from major presidential candidates for policies that will in- crease foreign investor confidence to invest in modernization of infrastructure, proposals to open the economy including mining, reduce business costs, and unburden the private sector of red tape and corruption.
The JFC is a coalition consisting of the American, Australian-New Zealand, Canadian, European, Japanese, Korean chambers and the Philippine Association of Multinational Companies Head- quarters Inc.
Source: Philippine Daily Inquirer