FDI in Philippines down by 34.1% in the last 6 years
According to the report published by the Institute for Development and Econometric Analysis (IDEA), total foreign direct investment (FDI) in the
Philippines fell by an annual average of 34.1% over the past six years.
Investment policy reforms implemented by governments in the late 1980s and 1990s helped increased FDI pledges to a record Pesos 262.1 billion (approx. $4.7 billion) in 1997. However since then FDI pledges decreased to Pesos 34 billion last year.
It is reported that the 1997 regional financial crisis, political instability, the high cost of doing business in the
Philippines and weak infrastructure were some of the factors of the decline in FDI.
India and Vietnam are now diverting their
investments to the
Philippines while Japanese investors, still the country's biggest source of foreign direct investment, are now going to
China.
Japanese investors prefer
China due to its low cost of doing business and its huge market size. According to recent announcement made by the
Japan External Trade Organization (JETRO), 36% of new foreign
investments by Japanese investors in 2002 went to
China and 14% to
Malaysia,
Indonesia,
Philippines and
Thailand.