ASEAN’s tiny man

While foreign direct investments (FDI) growth in the Philippines is strong, the sad reality is that our country is almost at the bottom of the Asean ranking in many aspects.

According to World Investment Report 2015 released last June by the United Nations Conference on Trade and Development, (UNCTAD), Singapore led the pack with $67.5 billion in net FDI or 51 percent of the regions total net FDI of $132.2 billion. Indonesia came in second in the region with $22.58 billion followed by Thailand with $12.56 billion, Malaysia with $10.79 billion, Vietnam with $9.2 billion, and then the Philippines with $6.2 billion. Completing the Asean list are Cambodia with $1.73 billion, Myanmar with $946 million and Laos with $721 million.

The UNCTAD said: The Philippines has emerged anew among top FDI destinations in East Asia, beating global and regional growth rates, but value of inflows still paled against those of comparable Southeast Asian peers.

In its August 2015 Vista report, Pinnacle Real Estate Consulting Services first defined FDIs as a category of cross-border investment associated with a foreign entity or individual having control or a significant degree of influence on the management of a local company through investment in debt or equity.

In 2014, the report noted that net FDI in the Philippines was $6.2 billion, but this is not all new money into the equity of local companies as 54 percent of the FDI was in the form of debt and 13 percent was the reinvestment of earnings (return of capital) and therefore not new capital. This leaves direct equity investment at only $2.03 billion last year or almost the same as the figure in 2012 of $2.006 billion, but higher than the 2013 number of $664 million in net equity investments.

The USA remained on top of the list of FDI source for the Philippines, accounting for 58 percent of total, followed by Hong Kong with 19 percent and Japan with six percent. China is at a mere two percent while South Korea, despite contributing greatly to tourism and dominating foreign visits, hardly mattered at a mere $5 million. Among Asean countries, only two countries invested: Thailand and Singapore, each accounting for two percent. In 2012 and 2013, Singapore had a negative net FDI in the Philippines, Pinnacle’s Vista report revealed.

The report continued with stating that manufacturing is the main beneficiary of Philippines FDI, followed by the finance and insurance sector. It noted that while several studies and articles have indicated that FDI in the Philippines is driven by the services sector which makes sense with the sustained growth of the BPO sector, this did not show in the official numbers released by the Bangko Sentral ng Pilipinas.

I hate to be the one to burst the bubble created by of our government officials who want us to think that our country is now better off but the Philippines is also the lowest in Asean and almost in the world on the Regulatory Restrictiveness Index produced by the OECD. As of June 2014, we have the most restrictive environment for foreign investments in Southeast Asia and tied with China on the world scale, the Pinnacle report said. At least we have one thing in common with China.

The Philippines also ranked low (95th) on the World Bank Group’s Ease of Doing Businesses Index. A higher ranking meant that the regulatory environment is more conducive to the starting and operation of a local firm, Pinnacle emphasized. Singapore was first while Hong Kong was third. Malaysia was ranked 18th, Thailand 26th, Vietnam 78th, and China 90th.

Pinnacle suggests that since FDI will continue to be a driver of future sustainable growth, these numbers need to be closely monitored and there is a need to understand the factors that impact FDI so that our government can take progressive measures to improve our rankings.

“We are entering the new election cycle so the current administration needs to keep the ship straight and finish strong and the new administration will need to focus on midterm strategies towards improving FDI by taking measures such as easing restrictiveness, improving the ease of doing business, expanding PPP and other critical infrastructure programs, and working with Asean and global trading partners to increase cross border flows and investments. This is a tough act to pull off as the administration will also need to keep all other aspects of the economy rolling forward while also keeping a leery eye on South Sea’s geopolitics,” it added.

Let us not give China a reason to treat our country as a tiny, insignificant player in the region (remember that newspaper feature produced by China that depicted the Philippines as the smallest among the caricatures of representatives of the various Southeast Asian nations?)

We may never become strong military-wise but we can be an economic powerhouse in the region that other players like China can take seriously. It took Vietnam a great deal of economic planning and single-mindedness to become what it is now. It was and continues to be able to lure FDIs by welcoming investors with open arms, not with restrictions or uncertainties like we do.

Baseless charges

In his counter-affidavit filed with the Office of the Ombudsman, Vice President Jejomar Binay maintained that “there is no evidence at all that will stand in court of law to indict, much more convict” him of the charges filed by the special panel of investigators in connection with the alleged anomalies for the bidding for the Makati Science high school building.

The complaint, according to Binay, is baseless because it is rooted solely on the allegation of Mario Hechanova, former head of the General Services Department of the Makati City Hall during Binay’s term as mayor, that then City Engineer Nelson Morales ordered him to award the project to Hilmarc’s Construction Corporation in 1997 upon orders of Binay.

Binay, in his counter-affidavit, said Hechanova was lying. First, it took Hechanova more than seven years before executing a statement on the matter. As early as 2009, Hechanova severed ties with the Makati City government, but he never mentioned about these acts until a few months before the May 2016 elections. Secondly, Hechanova cannot testify on the truth of something that he merely heard from another (Morales) who has long been dead and therefore can no longer defend himself, violating the rule on hearsay evidence.

As to allegations that Binay conspired with other officials in the rigging of the bidding, the Vice President maintains that he cannot be held liable.

Under the law, the existence of a conspiracy must be proven by independent and competent evidence and that conspiracy is proven by one’s participation in the planning, preparation and perpetration of the alleged conspiracy. But the fact that Binay signed documents and authorized payment to the winning bidder does not indicate that the Vice President participated in the rigging of the bidding, especially if the approving official relied on the good faith of his subordinates and merely acted in the performance of his regular functions.

The Vice President also maintained that while he is being charged with graft and corruption, which if found guilty carries the penalty of removal from public office among others, the Constitution is very clear that the Vice President is an impeachable officer, and as such, he can only be removed by impeachment.

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