DTI Reports Robust Investor Confidence in Philippines

Investor confidence in the Philippines remains unwavering, according to Department of Trade and Industry (DTI) Secretary Alfredo Pascual, despite a recent decline in foreign direct investments (FDIs). In a statement made on Monday, Secretary Pascual addressed concerns about the 20-percent drop in FDI inflows during the first half of the year, emphasizing that this decline is not indicative of a lack of faith in the nation's investment potential.

Data from the Bangko Sentral ng Pilipinas (BSP) revealed that FDI inflows in the Philippines amounted to USD3.9 billion in the first half of 2023, down from the USD4.9 billion recorded during the same period in 2022.

"In summary, although FDI in the Philippines declined in the first semester of 2023, there remains solid foreign investor confidence in the country, as demonstrated by the high reinvested earnings and the rising foreign investment approvals by BOI and other IPAs (investment promotion agencies)," Secretary Pascual stated.

He further explained that FDI figures reflect decisions made by investors well before the actual funds' inflow, as global financial conditions, including high inflation and interest rates, have played a role in the observed decline. Secretary Pascual pointed out that this trend is not unique to the Philippines, as other Association of Southeast Asian Nations (ASEAN) countries have also reported decreases in their FDIs.

"Factors such as inflation rates and investment rates substantially influence FDI decisions. Stable inflation and competitive interest rates generally attract FDI, whereas high inflation and unfavorable rates can repel foreign investors," Secretary Pascual emphasized.

He highlighted the positive growth in foreign investment approvals by the DTI's investment promotion agencies, noting that total IPA approvals for the first half of the year reached USD8.45 billion, a significant increase compared to the USD1.06 billion recorded in the previous year.

Secretary Pascual concluded by underlining that FDI trends are not solely indicative of recent investment decisions. They can be based on choices made years in advance and may be realized in stages, depending on various factors such as the nature of the project, the sector involved, and the regulatory environment of the host country.

"The future looks promising, given the rising trend in foreign investment approvals by BOI and our other IPAs, as well as the continued efforts to promote the Philippines as an attractive investment destination," Secretary Pascual added. Investors can remain confident in the resilience and potential of the Philippine market, despite the recent FDI decline.