EU investors cite PH’s political stability

Published August 25, 2021, 5:07 PM

by Bernie Cahiles-Magkilat

EU investors perceived the Philippines as more politically stable than its competitors in ASEAN, but are closely watching on the country’s vaccination success rate, a major trigger factor for a resurgence in foreign direct investments (FDIs).

This was the assessment of Lars Wittig, the new president of the European Chamber of Commerce of the Philippines (ECCP), during his first media roundtable as head of the organization.

Lars Wittig, ECCP President

Wittig said though that he cannot say for certain the Philippines is a lot stronger or would emerge stronger than other ASEAN countries in attracting FDIs amid surging COVID cases, but he pointed out that the fact that Philippines is more stable politically is more appreciated by foreign businesses. He also said that Filipinos have taken for granted this fact — political stability.

In fact, he surmised that the higher FDI inflows into the country last year could be attributed to the country’s stable government.

In 2020, he said, the Philippines generated $6.5 billion FDIs, higher than the combined FDIs generated by Thailand and Malaysia in that same year.

He noted further that while COVID-19 is the common factor among countries, the political predicament in Thailand and Malaysia is a very big concern by foreign investors.

“Two weeks ago the government in Malaysia resigned and since they are on hard lockdown, there can be no election so the king is running the country, and there are demonstrations going on in Thailand against government because many feel that the pandemic should have been addressed differently,” he said.

Thus, he said, the higher FDIs that came into the Philippines compared to the combined FDIs of Malaysia and Thailand tell a lot about “predictability and stability here.”

Wittig also expressed confidence of the country’s elections next year as he considered the election a major trigger factor for foreign investors’ entry.

Based on his experience, Philippine elections had been successful, no challenge on the correctness of the election and no doubt of victory regardless of who wins.

“We have a very good trend In that regard. I was here in 1998 and the last election and we have a positive trend actually,” he added.

However, with the still evolving COVID-19, Wittig said that another major trigger factor for the EU business investors to enter the country would depend on the success of the country’s vaccination efforts.

He cited on how the government has accelerated the arrival of more vaccines into the country.

He said a higher protection level would ensure there could be no more hard lockdowns in the future and mobility is assured.

For his part, ECCP Executive Director Florian Gotein also noted of a race among countries as to who achieves herd immunity faster.

Gotein explained that the Philippines is racing against its neighbors as foreign investors are looking as to who can assure safety of their return.

“There is a race going on so who is able to get its population vaccinated faster also gets to attract more FDIs faster,” he said.

Witting also said that while some EU firms that closed shop last and are not returning because the nature of their business is no longer viable, there are many other EU firms hanging in particularly in the areas of BPOs, manufacturing, transportation and food and beverage.

In fact, despite the challenges brought about by the pandemic, the decline in EU FDIs in the country was a lot less than other countries.

“It is very interesting to see by country of who are investing, who are sticking to the Philippines in these difficult times,” he said.

In 2020, Philippine FDIs went down 24 percent but the EU FDI dropped only by 12 percent while the US declined by 25 percent, and China zero.

For its investment promotion, Gotein said that ECCP is no longer focusing on MNCs, which have long established in the country for decades, but rather they are campaigning for small and medium EU businessES to expand in the country.

“We are blessed and in many cases there are many family run businesses in the 3rd and 4th generations even doing proper due diligence before they come in,” he said.

These small and medium firms are looking at how to outsource not just for the Philippines but to also serve other ASEAN countries.