Metro Manila (CNN Philippines) — In 2014, foreign direct investments (FDI) to the Philippines surged to an all-time high of $6.2 billion, according to the Bangko Sentral ng Pilipinas (BSP). That figure amounts to a 65.9% growth from 2013. The country outpaced Southeast Asia’s 5% expansion, and East Asia’s 10%. The growth also stands in contrast to last year’s 16% decline in global FDI, from $1.47 trillion in 2013 to $1.23 trillion, according to figures from the United Nations Conference on Trade and Development (UNCTAD).
In a statement, the BSP attributed the spike to strong investor confidence in the country’s solid macroeconomic fundamentals.
An UNCTAD report released Wednesday (June 24) noted significant foreign investments in the Philippines for 2014. Singapore sovereign wealth fund GIC Pte Ltd’s bought an 11% stake in local alcoholic beverage producer Emperador, Inc. for $390 million. On the infrastructure side, Angat hydropower Corp., a subsidiary of Korea Water Resources Corp., took over a hydroelectric plant in Bulacan for $440 million last October.
However, the same report also revealed that the Philippines lags behind several of its Southeast Asian peers in FDI. The UNCTAD’s World Investment Report for 2015 said that performance of Southeast Asian economies “differed significantly” last year.
Singapore, Indonesia, Thailand, and Vietnam outpaced Philippine FDI by sizable margins. At $67.5 billion, Singapore’s FDI alone is more than ten times that of the Philippines. Indonesia’s $22.6 billion FDI is more than triple that of the country, while Thailand’s $12.6 billion is double our FDI.
Although connectivity between Southeast Asian economies is intensifying, UNCTAD noted a persisting and uneven development between the countries, saying that “There are significant gaps in the level of infrastructure development.”
Citing 2013 figures from the World Economic Forum, the UNCTAD pointed out that Singapore ranked second in the world in terms of infrastructure quality. The Philippines ranked 96th.
“For some low-income countries in the region, poor infrastructural connectivity has long been a major obstacle to attracting efficiency-seeking FDI and linking to global value chains.”
Philippine law currently sets limits on foreign ownership in several business sectors. For example, foreign companies can only have up to 60% equity in investment houses regulated by the Securities and Exchange Commission.
But there have been signs of government reform — last year, President Benigno Aquino III signed Republic Act 10641, which allows the full entry of foreign banks into the country.
