Improved governance, human capital, infrastructure needed to attract more FDIs

MANILA, Philippines — The Philippines will need to address issues in governance, human capital and infrastructure to get more foreign direct investments (FDIs), according to think tank GlobalSource Partners.

“The challenge to the Marcos administration is undoubtedly singular and this is to address the various impediments to economic growth-governance and institutional strength, human capital development both basic and retooling, infrastructure and power,” GlobalSource Partners country analysts Diwa Guinigundo and Wilhelmina Manalac said in a report.

“Once effectively addressed, we should be able to see more FDI coming to be registered, and finally, materializing,” they said further.

Citing research studies, they said the Philippines has lagged behind its Southeast Asian neighbors namely Indonesia, Malaysia, Thailand and Vietnam in attracting foreign capital.

They said the Philippines has an advantage in terms of its young and educated population.

The country also has abundant natural resources including mineral deposits such as gold and nickel.

There are also numerous tourist destinations in all of the main islands of Luzon, Visayas and Mindanao.

The analysts said a study conducted by the staff of the Bangko Sentral ng Pilipinas, however, showed that in Southeast Asia, foreign investors look for a good credit rating and improved ease of doing business as more important than lower corporate income taxes and fewer FDI restrictions.

This is in line with other literature that foreign investors seek stability and transparency and prefer clear-cut and consistently implemented regulations to individual privileges or incentives.

The analysts said government management and implementation of policies are considered more important than population size and socio-cultural factors by investors.

They said it is important to attract more investments to support economic growth.

“We cannot overemphasize the role of foreign investment, whether direct or portfolio, in sustaining the pace of economic growth in developing and emerging countries such as the Philippines,” the analysts said.