The continued recovery of foreign direct investment (FDI) this year is an indicator of the Philippines’ solid long-term prospects, the Department of Finance (DOF) said.
Based on the latest DOF economic bulletin, the department noted that the country’s FDI sustained its robust growth in January to July this year, rising 43 percent to $5.56 billion from $3.89 billion in the same period last year.
Finance Undersecretary Gil S. Beltran said the end-July FDI was also higher by 19 percent compared with its pre-pandemic level of $4.67 billion in the same time in 2019.
“Year-on-year increases in reinvestment of earnings and net debt instruments of 19.3 percent and 78.7 percent, respectively, mitigated the 12.4 percent decline in net equity capital investments for the period,” Beltran said.
Net equity capital investments for the period were primarily in the manufacturing; electricity, gas, steam, and airconditioning; financial and insurance, and; real estate industries.
“The continued year-on-year recovery of FDI during the first seven months of the year suggests that the Philippines’ long-term prospects remain positive,” said Beltran, who is also the DOF chief economist.
“A prudent and calibrated response to the risks posed by the COVID-19 pandemic and continuing the vaccination drive will be important in safely reopening the economy,” he added.
In July alone, FDI posted a 52 percent growth year-on-year from $831 million last year to $1.26 billion in 2021.
“The considerable year-on-year increase in net debt instruments has contributed significantly to the growth in FDI in recent months, Beltran said.
Meanwhile, the DOF official said the proposed Capital Markets Developments Act will increase demand for financial securities and support the continued growth of FDI.
Additionally, he said other reforms still in the legislature, such as amendments to the Foreign Investment Act (FIA), the Commonwealth-era Public Service Act (PSA), and the Retail Trade Liberalization Act (RTLA) will also be instrumental in mobilizing more investment.
The Department of Finance (DOF) said the Philippines needs the passage of key economic reform measures to bring in more capital and spur job creation in the medium- to long-term.
Earlier, Beltran urged Congress to pass the amendments to FIA, PSA, and theARTA, saying these three economic bills will help bring in more capital, generate more employment with possibly better wages and make the economy more competitive.
The House of Representatives already passed the three economic measures, which President Duterte certified as urgent. The Senate, on the other hand, has yet to approve the Public Service Act amendments.
With less than a year before President Duterte’s term ends, Finance Secretary Carlos G. Dominguez III had urged Congress to focus on the passage of “doable” economic bills to speed up recovery from the pandemic.