Investor confidence to boost FDI, says BSP

Foreign direct investment (FDI) will increase this year on investor confidence over the economy and the prevailing political climate in the country. Bangko Sentral ng Pilipinas (BSP) Gov. Amando Tetangco Jr. attributed the expected increase to improved business sentiments the country gained from the successful national elections in May and the surprising pace of the economy in the first half. “I think we would see an increase in FDI, especially with the higher projected economic growth by the government. It means investment leads to growth. Economic growth also encourages investments," Tetangco said. He said the Aquino administration’s public-private partnership (PPP) initiative would encourage higher FDI inflows in the second semester of the year. “The government’s plan to increase spending for infrastructure through the PPP and other possible ways of attracting funding will result to higher FDI inflows." The BSP now expects $2 billion in FDI –instead of $1.8 billion – this year, up 2.5 percent from $1.95 billion in 2009 BSP data showed that FDI dipped to $446 million in the first five months of the year from $1.393 billion in the same period last year. The central bank attributed the drop in FDI to overwhelming concerns about the Europe debt crisis. Investors in the first five months came largely from the US, Switzerland, Japan, Netherlands, Singapore, and Hong Kong. The bulk of investments were placed in the manufacturing, real estate, construction, services, financial intermediation, mining, trade, transportation, storage, and communications sectors. FDI went up to $1.95 billion last year from $1.54 billion in 2008, as investors ploughed back earnings to Philippine-based operations in recognition of the resilient economy. —JE/VS, GMANews.TV