THE investment commitments from the Chinese government and private sector will significantly improve the Philippines’ prospects of joining top Southeast Asian countries with the most foreign direct investments (FDl) within the next few years.
The credit and investment commitments from Chinese banks and companies were secured during President Rodrigo Duterte’s state visit to the Asian giant last month.
Malacañang has announced that commitments from the four-day visit reached $15 billion or nearly three times the amount of the total FDI inflows the Philippines registered in 2015.
According to the United Nations Conference on Trade and Development (Unctad) World Investment Report released over the weekend, total FDI inflows to the Philippines totaled $5.23 billion in 2015, much lower than the FDI obtained by its Southeast Asian neighbors Indonesia ($15.50 billion), Vietnam ($11.80 billion) and Malaysia ($11.12 billion).
On the right track
The Duterte administration’s economic rebalancing toward Asia met opposition from several fronts, but the $15-billion commitment from the state visit to China may prove the government is effectively on the right track, said Cris Frianeza, Philippine Chamber of Commerce and industry (PCCI) secretary general.
Despite a wave of negative coverage of the President’s anti-US pronouncements during his China sojourn, the prospect of significant economic gains from China in the coming years has influenced an uptrend in share prices on the Philippine Stock Exchange.
The PSEi peaked at 7,721 points during the state visit, only to settle at the 7,650 level by the end of trip on October 21 – still higher than 7,571 when the President flew to china on October 18.
ln addition, Malaysia-based debt watcher RAM Ratings upgraded the Philippines’ Asean credit rating by a notch on October 16, citing legislative and administrative reforms as well as the country’s ability to withstand external volatilities.
The Philippines’ credit rating was raised to “A1” or five notches over the minimum investment grade. RAM also affirmed the Philippine Global credit rating at “BBB3” which is equivalent to the minimum investment grade.