MANILA, Philippines — The Philippines should open up more to foreigners if it is to attract more job-creating investment, the Asia-based Hinrich Foundation said on Tuesday.
There is a “window of opportunity which could be the right time to open up the country”, said Riccardo Crescenzi, professor of economic geography at the London School of Economics, in an online forum organized by Hinrich.
Crescenzi did not explain when this opportunity would arise, or what this window was that would allow the economy to open up more to foreign investors. For years, the Philippines has lagged behind its regional peers in attracting FDI, not because of its dilapidated infrastructure.
After hitting a record net inflow of $10.1 billion in 2017, data showed that FDI to the Philippines began to decline from that peak, with the pandemic worsening the downward trend.
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As the virus fight eases around the world, net FDI inflows hit a record high of $10.5 billion last year. Meanwhile, the outgoing Duterte administration managed to make a last-ditch effort to enact laws that ease restrictions on foreign investment.
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Crescenzi and Oliver Harman, a city economist for the University of Oxford’s International Growth Center, wrote research commissioned by the Hinrich Foundation that looked at different ways in which FDI and global value chains could be harnessed by country.
For Harman, the Philippines has experienced “outward and inward” FDI, in which a country invests abroad and brings home the lessons it has learned from that investment experience.
The research noted that the Philippines, alongside Cambodia, Indonesia, Thailand and Vietnam, depend on their regional peers for “inbound” investment. At the same time, this same group of countries has also directed its investments to countries in East and Southeast Asia – a type of “outward” FDI that researchers believe could bring new knowledge. facilitating economic development.
“There are pressures to engage in economic resilience policies looking inward. In the long term, it is important that economies remain open,” Harman said.
Harman thinks opening up the Philippines more to the rest of the world may prove easier in coming years, citing the local call center industry that has flourished in areas outside the capital. He said cities like Baguio and Bacolod have been successful in securing investment from BPO firms when they understood industry needs and identified regional assets with which the two cities should partner.
“To attract FDI, it is necessary to consider actions at lower geographical scales. It also reminds policy makers that while regional assets can take a long time to shift, local institutions can match existing ties to global networks in the short term,” the researchers said.