PH eyes to overtake Vietnam, Indonesia FDIs

Published December 7, 2022, 5:10 PM

by Bernie Cahiles-Magkilat

The Board of Investments (BOI) has set a fighting target to overtake Vietnam in terms of foreign direct investment (FDI) inflows by 2024 and Indonesia by 2026, around midterm of President Ferdinand Marcos Jr.’s administration.

During a panel at the 2022 National Exports Congress on Wednesday, Dec. 7, Trade and Industry Undersecretary and BOI Managing head Ceferino S. Rodolfo conveyed that the President has agreed with Trade and Industry Secretary Alfredo E. Pascual, who is also BOI chairman, on his 6-point agenda to be able to overtake the FDI inflows of the two ASEAN neighbors during their recent meeting.

About six years ago, he said, the Philippines was number six in all of the ASEAN countries in terms of net FDIs, but in 2021 the Philippines ranked fourth, overtaking Malaysia and Thailand. Singapore remained number one doing about $80 billion in FDI inflows and even $100 billion on a good year. Indonesia generated $20 billion and Vietnam got $15 billion.

“We actually did very well last year in terms of net FDI is it was a record breaking year for us. We did $12.4 billion, the highest on record. So we bested what we were able to achieve in 2017, which was about $10.5 billion. So even in a pandemic year, we registered the highest ever net FDI inflow to the Philippines. So please don’t give up on the Philippines because we are getting there,” said Rodolfo.

Of the six points, Rodolfo said the DTI/BO has already asked the President for the issuance of an executive order for the creation of a greenlane for strategic investments where concerned agencies will have to observe a processing period for licenses and permits based on the requirements of the Anti Red Tape Authority. Malacanang is expected to issue the EO shortly.

Pascual, who was described by Rodolfo as working very hard, has also discussed with the Fiscal Incentives and Review Board to settle all complaints on value added tax under the CREATE Law.

The DTI secretary is also working on reducing cost of power and logistics. Rodolfo noted that DTI and BOI have gathered that investors in Indonesia, Thailand and Malaysia are looking at complying with their commitments toward 100 percent zero carbon emission by 2030.

“This is where the Philippines can make a mark,” Rodolfo said adding the Philippines can offer as a location as it now allows 100 percent foreign investment in offshore RE such as solar and tidal-based power generation projects. The World Bank has already mapped out areas that foreign investors can invest the type of 1.2 gigawatt of power projects. If RE project start construction immediately, these projects can be onstream by 2028.

In addition, the BOI/DTI is looking at further promoting downstream investments for green metals particularly nickel, copper, and cobalt. He said that investments are needed for batteries and storage for electric vehicles.

Rodolfo noted that the spike in Indonesian exports was partly due to their imposition of a three-year export ban on nickel forcing companies to invest in Indonesia, resulting in nickel exports to balloon to $20 billion from $1 billion.

Rodolfo said that the Philippines accounts for 32 percent of all nickel exports of which 90 percent go to China and are processed for exports to biggest battery manufacturers in the world. “So, here we need integration of industrial policy,” said Rodolfo.

With the Biden initiative on Indo Pacific Economic Framework, Rodolfo said there are also discussions on FDIs from South Korea EV battery manufacturer with local nickel miners.

Next item in the DTI/BOI agenda is the ratification of the Regional Comprehensive Economic Partnership (RCEP) which the Senate committee on foreign relations has already calendared.

The DTI/BOI has also pushed for more free trade agreements particularly the completion of the FTA with South Korea.