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Capital flight under Aquino bigger than during Marcos regime

In his last SONA, President Benigno Aquino III boasted: “(Under my administration) and for the first time in history, we are unanimously deemed investment grade by the most prominent credit rating agencies.”

The agencies’ hosannas aren’t really unexpected, what with the nearly P2 billion Aquino’s government has paid them to do these assessments — eight of them.

Only Aquino and his officials really believe in the rosy picture these rating agencies have painted. (Name one really big foreign investment in the past five years.) Foreign and even local businessmen aren’t plunking their money here, but elsewhere, if we go by hard, comprehensive data and not wishful thinking based on anecdotal evidence.

According to official Bangko Sentral ng Pilipinas data, the net foreign exchange (“dollar”) outflow — or the excess of money flowing out of the country over money coming in — in 2014 totaled $2.9 billion.

This amount, just for one year, is nearly as big as the $3 billion in capital flight for the two years of 1982 and 1983 under  Marcos’ watch, during the country’s worst economic crisis triggered by the Ninoy Aquino assassination and our default on the payment of our foreign debts.

Massive capital flight under Daang Matuwid regime
Massive capital flight under Daang Matuwid regime

It is also nearly as large as the $3.3 billion capital flight in 1997 when foreign capital swiftly left Asia in the wake of the Asian Financial Crisis.

According to the BSP itself, the net outflow — reported as the country’s balance of payments position — is the result of Filipinos bringing their huge amounts of money out of the country to invest them abroad, foreigners withdrawing or slowing down their investments in the stock market and other short-term investments here, and overseas firms slowing down their equity inflows into the country.

The BSP of course wouldn’t draw attention to the foreign exchange hemorrhage in 2014. It had still had to report it, though only in dry technical language: “The financial account registered net outflows amounting to US$10.1 billion in 2014, more than fourfold the USS$2.2 billion net outflows registered a year ago. This was on account of the substantial increase in the net outflows in other investments and the reversal to net outflows in portfolio and direct investments,” said the BSP to explain the $2.6 billion BOP deficit.

The rich here have virtually rushed out of the door to bring their money elsewhere starting 2012, when their investments abroad totaled $3.8 billion, growing from just $593 million in 2011. These increased to $6.3 billion in 2013 and then rocketed to $16 billion in 2014.
The moneyed here and elsewhere of course think the same, so they’ve also moved out. Contrary to Aquino’s boast that foreign investments’ level in 2014 are the highest in history, the BSP reported for 2014: “The direct investment account reversed to net outflows of US$789 million in 2014 from net inflows of US$90 million a year ago.”

Even a number of local corporations, according to BSP data, chose to invest in enterprises abroad rather than here, with their direct investments jumping to $7 billion in 2014 from just $3.6 billion the previous year.

It is the same fall in confidence in terms of foreign portfolio investments, or those put in the stock market and other passive venues by firms overseas.. “The portfolio investment account recorded net outflows of $2.5 billion in 2014, a reversal of the previous net inflows of $2.5 billion,” the BSP report said.

The flow of investment funds from the country was so huge that even the increase in remittances form Filipino workers overseas weren’t enough to cover them.

Again, belying Aquino’s SONA claim that things here have been so good that OFWs are returning home, their remittances — because of more deployments rather than due to increases in their wages — grew from $17.6 billion in 2010 to $22.6 billion in 2014.

And Aquino boasts that under him the country has become “Asia’s Rising Tiger”?

We really wish so. But the data just doesn’t show so.

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