SINGAPORE BANK URGES NEXT PH GOVT

Ease limits, boost FDI – DBS

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Boosting investment growth in the Philippines will be one of the key challenges to the successor of the Aquino Administration, Singapore-based bank DBS said.

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“Whoever wins the presidential election in May will have plenty to prove,” DBS said in a research note.

The bank said what the next government will do to step up investment growth should be watched closely.

The bank noted that fiscal revenue collection has been strong, at an average annual growth of 12 percent during President Benigno Aquino 3rd’s term.

“It is the main reason that allowed Aquino’s administration to kick off the infrastructure overhaul through its public-private partnership program,” it said.

DBS noted that total investment growth contributed about a third of the economic growth during Aquino’s term.

With that suggestion that the next government will be starting from a sound position, it stressed that investment is the key that could sustain robust consumption growth and potentially bring overall Philippine gross domestic (GDP) growth to 7 percent to 8 percent trend.

DBS also suggested that addressing the long-debated constitutional limits on foreign ownership could play a role in increasing investment.

“It is important to watch if the next government supports the easing of foreign ownership limits,” it added.

FDI dwarfed by remittances
DBS pointed out that total foreign direct investment (FDI) which is projected at $6 billion last year, practically unchanged from $6.2 billion in 2014.

For the January to November 2015 period, FDI inflows hit $5.452 billion, down 3.4 percent from $5.646 billion a year ago.

This indicates that total FDI continues to be dwarfed by the growth of foreign worker remittances, which has been sustained every year in the past decade, the bank said.

“Strong remittance flows are definitely a positive for the macro risk profile. At the same time, however, it triggers questions about the dynamism of the local economy, especially since foreign worker remittances make up almost 10 percent of the economy,” the bank said.

Last year, personal remittances from Filipino overseas rose to a record high of $28.483 billion, breaking the previous high of $27.273 billion posted in 2014.

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2 Comments

  1. Liberalize the current PROTECTIONIST economy by removing those Anti-FDIs Economic Restrictions esp. the 6/40. Allow 100% Business Ownership to Foreign Direct Investors in the country.

    Removing most of these Restrictions enshrined in the 1987 Constitution will definitely attracts more if not. huge Foreign Direct Investments in the country that will generate income for the country at that same will Create more Decent-paying Jobs.

    Of course, We just don’t want these Economic and Job Opportunities to be over concentrated in Imperial but instead we also want these to spread out through out the regions and the countrysides and it can only happen under FEDERAL-PARLIAMENTARY System/Form of Government.

    Therefore, let us support #ReformaConstitucionalFilipinas

  2. The next administration will have its hand full fixing the economy for a more inclusive development. Less of politics should be the order of the day. This current administration has squandered huge opportunities in creating a competitive business environment and expanding infrastructure programs. It’s about time government open the country to foreign investors . Easing on constitutional limits to foreign ownership is key to attracting investments to set up plants and create jobs. Long term investment is sorely needed by this country. Economic policies that will promote long term and sustainable economic growth should be government’s prime focus, and no politicians to critical departments: DOTC, DPWH, DTI, DOF and their attached agencies. This is the only way to make this country great again.