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Home›Economic Contraction›The Philippines among the least attractive FDI destinations in APAC

The Philippines among the least attractive FDI destinations in APAC

By Amber C. Lafever
October 11, 2021
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The Philippines remains one of the least attractive destinations for foreign direct investment in the Asia-Pacific region due to poor infrastructure. – PHILIPPINE STAR / MICHAEL VARCAS

Through Jenina P. Ibañez, Journalist

THE PHILIPPINES are one of the least attractive destinations for foreign direct investment (FDI) in Asia-Pacific as a countrytry continues to have poor infrastructure and business environments, Oxford Economics said.

The think tank in a brief released on Monday said the country was ranked 13the out of 14 Asia-PaciFic (APAC) in its FDI attractiveness scoreboard, ahead of only Taiwan.

Oxford Economics said the poor ranking adds weight to its forecast that the Philippines will experience deep economic scars from the coronavirus pandemic.

In the scorecard, the Philippines scored negative in the infrastructure and logistics categories; political and business climate; and the size and potential of the market.

Oxford Economics said the country ranked poorly in terms of the quality of infrastructure and performed worse than its neighboring economies in the World Bank’s 2020 Ease of Doing Business report.

The Philippines rank 95e place among 190 economies in the World Bank report, which has since been discontinued.

On the other hand, the country obtained positive scores in the structure of exports and the dynamics of the workforce.

“Indonesia and the Philippines both score high in terms of work dynamics,” Oxford Economics said.

“Ongoing urbanization and a relatively young workforce mean that over the next decade we expect the supply of labor in these two economies to increase by 25 million. We also expect their average annual income to be around a third lower than China’s in 2029, ”he added.

Oxford Economics also noted the thffefforts to lower the corporate tax rate and its plans to facilitate compulsory local employment for foreign investors.

John Forbes, senior advisor to the Philippine American Chamber of Commerce, said it was one of many similar reports in recent years that show the Philippines is lagging behind in attracting business. IDE in the region.

However, Forbes noted that Oxford Economics’ projection that infrastructure spending as a percentage of GDP for Vietnam by 2025 will be five times the rate for the Philippines is “hard to believe.”

“And the report does not take into account the Philippines’ greatest success in FDI in services exports (business process outsourcing), second in Asia after India,” he said.

The US House is one of many foreign groups supporting amendments to the Public Service Act (PSA), which could change the definition of public services to allow more foreign investment in telecommunications and transportation.

The economies at the top of Oxford Economics’ FDI attractiveness scoreboard are China, Vietnam and Malaysia.

“We believe the outlook for FDI inflows into ICCA over the medium term remains strong, although supply disruptions due to the pandemic and uncertainties over the pace of the recovery may see some FiCompanies are rethinking their supply chains, ”said Oxford Economics.

“We expect China to remain the number one destination for FDI given the rapid growth of its domestic market. And as supply chains continue to adjust to rising labor costs in China and trade protectionism, we expect Southeast Asia, especially Vietnam, to be the main driver. beneficiary. The region is well established in global supply chains, and its workforce dynamics and openness to trade and FDI remain very favorable. ”

Oxford Economics warned in July that the Philippine economy was facing deep scars from the pandemic, estimating that the country’s projected gross domestic product (GDP) in 2025 will still be 8.4% lower than its pre-forecast. pandemic.

Policymakers forecast GDP growth of 4-5% this year and 7-9% in 2022, after a record contraction of 9.6% in 2020.


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