Filipino companies and the rich don’t seem impressed by the 6.8 GDP growth rate in 2012, nor by the American rating agencies’ gushing reports that the Philippines has attained investment grade rank.
Our capitalists moved $1,845 million out of the country in 2012, the biggest outflow since 2008. It was more than the $1,816 million invested by foreigners in the country the previous year. This is according to the data in the United Nations Conference on Trade and Investments’ World Investment Report 2013 (pages 213 and 217.
That only shows that our economic elite know more about the global and local economy than President Aquino’s administration and the rating agencies, which by the way were paid a total of P1 billion in fees in exchange for those glowing reports.
The 2012 capital outflow pushed up significantly Filipinos’ stock of investments abroad to $9 billion, which is, to compare, 29 percent of the stock of foreign investments in the country.
There were two instances in recent history when Filipinos’ capital investments abroad broke the $1 billion mark.
The first was in 1984, when the county’s worst political and economic crisis broke out, due to both the global debt crisis and the assassination of Senator Benigno Aquino in August of the previous year.
There was also a $579 million blip in 2004 (as against the 2003 figure of $303 million) due to the economic elite’s worry that the jailed Joseph Estrada’s proxy, Fernando Poe, Jr., would win the elections that year. That, the reasoning went, would lead to coups and counter-coups.
The obvious question that arises: Do the Philippine elite expect political turbulence during Aquino’s last three years in office, in which case would it be better for them to put their money in more stable countries?
The second big instance of capital flight from the Philippines was in 2007, when the global financial crisis broke out, the worst since the pre-war recession.
That the Filipino elite usually have advanced information ahead of the markets is demonstrated by the fact that, in 2007, they managed to move out more than $3 billion, just when the crisis was breaking out.
Another obvious question: Is the Philippine economic ruling class expecting a global or Philippine recession that they need to park their money in safer havens?
Talk of possible parallels in history. The US market still seemed oblivious of the crisis in 2007, with the Dow Jones still on a bull run, breaching for the first time the 14,000 point level. There was market euphoria similar to the Philippine stock market’s reaching the record high of 7,000 points early in the year.
Alas, the Dow Jones index floated downwards after that (although with a few days of remarkable recovery, as the Philippines market did the other day) to eventually crash October 6 -10 of 2008, its worst week on record when it lost 22 percent.
Unusual for an institution known for its efficiency in data collection, the Bangko Sentral ng Pilipinas’ latest published data on ”residents’” investments are only for 2011. A comparison of the BSP’s data indicates that there are years when our central bank’s data are lower than that of the UNCTAD’s. The UNCTAD’s data on Filipino investments abroad are collected directly from recipient country.
The UNCTAD data show that while foreign direct investments into the Philippines increased to $2.8 billion in 2012 from $1.8 billion the previous year, we are far behind our peers—or former peers. Indonesia last year got $20 billion; Malaysia, $10.1 billion; and Thailand, $8.6 billion.
Our competitor now as a preferred investment site is Myanmar, which nearly had the same foreign investments as ours, which is something in the vicinity of $2.2 billion.
Those figures jibe with transnational companies’ perceptions. Based on the UNCTAD’s survey of 159 global companies, the Philippines in 2012 is ranked 19th attractive site for investments, way below Indonesia, which is ranked 4th; Thailand, 8th; and Vietnam, 11th.
After three years of daang matuwid rhetoric, we’re losing out in the region as a site for foreign investments. Even our economic elite are moving their capital out.