The Department of Finance (DOF) expects the country’s high growth in foreign direct investments (FDIs) to be sustained following the enactment of economic liberalization reform laws.

In his DOF Economic Bulletin on Sunday, March 6, Finance Chief Economist Gil S. Beltran said the more than half jump in the FDI level registered from January to November last year is sustainable.

As Beltran pointed out that even with Covid-19, the end-November FDI haul managed to surpass by more than a quarter its pre-pandemic record in 2019.

In the first 11 months of 2021, FDI totaled $9.2 billion, higher by 52 percent than the $6.1 billion in the same period a year earlier. Likewise, it was 26.4 percent more than the $7.3 billion in the January to November period in 2019.

The considerable year-on-year increase in net debt instruments continued to contribute significantly to the growth in FDI observed in 2021, Beltran said.

But the former DOF official believes this is just the beginning, citing the proposed Capital Markets Development Act will further increase demand for financial securities and support the continued growth of FDI.

Additionally, Beltran said the recently passed amendments to the Retail Trade Liberalization Act, along with other economic liberalization reforms will be instrumental in mobilizing more investment into the country.

“More than the potential implications on financial markets development, the economic liberalization reforms could hasten economic recovery, both at the macro and household levels,” Beltran said.

“On the one hand, those structural reforms, through FDI, help to rekindle an investment-led growth,” he added.

Economic liberalization reform allow more firms to set up shop, which effectively expand the universe of potential employers and give competition to entrenched old boys’ club, Beltran said.

“One aspect of competition is that of attracting and retaining workers, which could mean offering higher take-home pay and other benefits,” he said.

"Arguing along parallel lines of Deng Xiaoping who declared that it does not matter if the cat is red or black as long as it catches mice, a pragmatic household head would not care whether the employer is brown, yellow, or white as long as the latter is a good paymaster,” he concluded.

In November alone, FDI posted a 96 percent growth year-on-year, from $559 million in the previous year to $1.1 billion in 2021. This was also 61.4 percent larger than the 2019 level of $679 million.