Phl catching up on FDI – Citi

MANILA, Philippines - The Philippines still lagged behind Southeast Asian neighbors in attracting foreign direct investments (FDIs). But a report from global banking giant Citibank indicated that the Philippines is cathing up on FDI, recording  the highest growth rate of 185 percent as against the 2.11-percent average expansion across the so-called Asean-6 in 2012.

“The Philippines remains the regional FDI laggard but interestingly saw the sharpest year-on-year rise in the Asean (Association of Southeast Asian Nations),” Citi said in a report.

The country, awarded investment-grade status by two credit rating agencies this year, attracted a total of $2.8 billion in FDI last year, according to data from the United Nations Conference on Trade and Development  (UNCTAD) cited in the report.

The figure represented a notable increase of 185 percent from $981 million in 2011, data showed. Philippine FDI growth rate was significantly higher than the 2.11-percent expansion recorded across the so-called Asean-6.

Asean-6 groups Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

“The Philippines is catching up from a low base,” Citi said. It however did not cite any reason for the fast FDI growth posted last year.

Regionally though, Citi said Asean-6 is benefiting from a shift in investor sentiment toward China, where rising labor costs and an appreciating yuan have dented competitiveness of its manufacturing industry.

Last year, FDI to China decreased to $121 billion from $124 billion, according to UNCTAD figures, suggesting investment inflows “may be finally peaking.”

“This corroborates anecdotal evidence of diversification of FDI portfolios…away from China towards Asean,” Citi said.

For the Philippines, a demographic dividend – characterized by a booming work force – could also bode well for an increase in FDI. Citi said the same is true for the rest of Asean-6, except Singapore.

On nominal value though, the Philippines’ FDI accounts for less than one percent of what the region got during the similar period.

A total of $111.3 billion in FDI was shared last year by Asean-6, data showed.

Broken down, Singapore got the highest chunk of FDI inflows at $56.7 billion, followed by Indonesia ($19.9 billion), Malaysia ($10 billion), Thailand ($8.6 billion), and Vietnam ($8.3 billion).