With labor and other production costs going up in China, manufacturers are looking for other countries where they can set up shop. Instead of going to the Philippines, they are going to Vietnam, according to foreign investment groups. Neighboring Cambodia, Laos and Myanmar are also attracting the attention of foreign investors.
The Philippines needs those investments to help create meaningful jobs that can make a dent in poverty incidence. Foreign direct investments in the Philippines were up last year, but the country remained far behind its Southeast Asian neighbors Indonesia, Malaysia, Singapore and Thailand in terms of FDI levels. In the past months, FDI inflows in the Philippines have slowed down.
Foreign investment groups, which have submitted numerous proposals to the government for increasing FDI, are calling for a review of policies that contributed to the 43 percent year-on-year plunge in FDI last April. As in the past, the investors are citing the need to lift restrictions on foreign ownership and competition. In recent months, several investors complained that the Philippines appeared to be moving in the opposite direction.
Investors say the Philippines as well as the other members of the Association of Southeast Asian Nations can attract more FDI by harmonizing customs procedures, standards and regulations. With a combined population of 650 million, ASEAN offers a huge market, and investors want improved access.
The Aquino administration knows what investors want and has received detailed suggestions on what can be done to stimulate FDI. Action on many key areas, however, has moved slowly. President Aquino has said among his long-term goals is to bring home the majority of Filipinos who have found it necessary to find decent employment overseas. Perhaps the slowdown in FDI will give urgency to the implementation of reforms.