President Aquino’s claims that foreign investors have been queuing up to invest in the country enticed by his daang matuwid governance just don’t seem to match reality. Last year, for the first time ever two of the more backward ASEAN countries, Cambodia and Myanmar, overtook our nation in terms of foreign direct investment inflows (FDI).
According to data from the United Nations Conference on Trade and Investments’ latest “Global Investment Trends Monitor,” FDI inflows in 2012 into Cambodia totaled $1.8 billion, a 104 percent increase from last year. Myanmar (Burma) on the other hand had $1.9 billion for 2012, a 90 percent increase from last year. (The figure for Singapore is way too big to include in chart, in 2012 at $54.4 billion.)
The Philippines, received much less than what the two countries each got: $1.5 billion, just a 16 percent increase from last year’s $1.3 billion.
The UNCTAD’s figure of $1.5 billion for the Philippines may could even be lower since the fourth-quarter figures for the country are only estimates. Actual FDI up to September 2012 amounted to only $1 billion, and it is unlikely that the country received $500 million—or 33 percent of the total full-year figure—in the closing three months of the year.
Investment inflows of $500 million in just three months would have also been trumpeted by the administration.
That Cambodia (2011 GDP per capita: $853) and Myanmar ($824) have overtaken the Philippines ($2,345) as a preferred foreign investment site is a tectonic shift in the region’s economic landscape, one that indicates that something seriously wrong is going on in our country.
Cambodia had averaged only $645 million in annual foreign investments inflows from 2005 to 2010 while Myanmar, $627 million. Both countries more than doubled their foreign investment inflow in 2012. The Philippines on the other had annual average inflows of $2,083 in the same period. Last year, dropped 25 percent to $1.5 billion.
Cambodia attracted more foreign investments despite the fact that in the World Economic Forum’s Global Competitiveness 2012-2013 index, it ranked much lower at the 85th slot than the Philippines’ 65. Myanmar isn’t even included in the listing.
However, Cambodia overtook the Philippines in the World Bank’s “Ease of Doing Business” rankings last year, getting the 133rd slot, while the Philippines landed at 138. (The ranks of two countries put it in the “mostly unfree category. Again Myanmar wasn’t even ranked in this list.)
Similarly in the Heritage Foundation’s 2012 Index of Economic Freedom, Cambodia was a bit ahead at slot 95 than the Philippines at 97. Myanmar though was way down the listing of 161 countries, at 177.
The importance of foreign investments to a country’s growth is now unquestionable. The Legatum Institute’s 2012 Prosperity Index report emphasized its importance to Southeast Asian countries in its section “Regional Analysis: Asia-Pacific”: “One metric that can shed light on why Vietnam, Thailand, Indonesia, and Malaysia. are rising is the level of FDI flowing into each country. This is because FDI, when managed appropriately, can be a source of economic growth . . . Among the ‘Tiger Cubs’, Thailand and Indonesia are the biggest recipients of FDI. In terms of FDI as a share of GDP, however, Vietnam outperforms the other ‘Tiger Cubs’ as FDI net inflows constitute almost 8 percent of its GDP.” The Philippines was not among the so-called Tiger Cubs.
The annual FDI flows into the Philippines averaged $1,746 billion during Joseph Estrada’s watch and $2,171 under Gloria Macapagal-Arroyo. This has steeply gone down in the two and a half years under Aquino to $1,360.
All these data raises a crucial question: Rather than the country’s economic and legal environment, could the actions and performance of Mr. Aquino be the more important factors for the steep fall of foreign investments under his administration?
