Bullish on Investments
One of the major economic indicators I monitor as an entrepreneur is the level of investments in the Philippines, both foreign and domestic. It is as critical as inflation, interest and exchange rates because investment provides you with a lead for your next economic opportunity.
Investment pledges or commitments as they suggest reap dividends in the future for both the businessman or entrepreneur and the government in terms of tax revenues. Foreign investments, aside from supporting the foreign exchange reserves, will generate new jobs, promote economic development and increase the purchasing power of a local community where the new business will open, and sustain growth.
For the investor with links to the foreign markets, his investment opens up additional export opportunities and bolsters the nation’s overall performance in the outbound shipment category. Investments will also create business opportunities in other economic sectors as more locals increase their expenditures. The newly employed, for one, may buy new appliances, raise his household spending and even start thinking of acquiring a car or a house-and-lot package.
The latest data released by the Board of Investments are encouraging. The agency has upgraded its 2023 investment registration target for this year to P1.5 trillion, or 50 percent higher than its original forecast of P1 trillion. I do not blame Trade Secretary and BOI Chairman Alfredo Pascual for his optimism, after noting the strong pipeline of investment leads that include those generated through the state visits of President Ferdinand Marcos Jr.
According to the BOI report, the nation’s primary investment promotion body, new applications for registration totaled P414 billion as of February 9, 2023, or 143 percent higher than the P170.5 billion posted in the same period in 2022. The investment commitments in the coming months will surely increase as the DTI expects the entry of P344 billion in investment leads generated during President Marcos’s state visits, through the combined efforts of the BOI and other investment promotion agencies.
For the entrepreneur reading this column, you might be interested to find out where the investments would be pouring in. Per the BOI report, Western Visayas attracted the highest investment pledges with P293.3 billion, followed by Calabarzon with P111.7 billion. Eastern Visayas accounted for P3.5 billion of the pledges, while Central Luzon and Metro Manila shared P3 billion and P783 million, respectively.
I am certain that President Marcos’s recent state visits have placed the Philippines back on the radar of foreign investors with the chief executive himself leading the sales pitch. An increasing number of investors from Southeast Asia, the US, Belgium, China and Japan are now showing strong interest in placing their bet on the Philippines.
President Marcos has already visited nine nations to renew official ties and strengthen the economic relations of the Philippines with these countries.
His recent visit to Japan, which I wrote in my previous column, produced excellent results. The Philippines and Japan signed 34 investment agreements worth about $13 billion, comprising of closed deals and prospective ones.
The Philippines can expect more investment deals and pledges in the coming months, depending on the results of discussions from a large business forum during the President’s state visit that gathered 80 Filipino businessmen and 300 Japanese companies.
Increased investments in the Philippines will naturally translate into a more robust economic growth. The conservative International Monetary Fund is already bullish on its Philippine economic growth estimates, even without the forthcoming investments and despite the global headwinds.
It is now revising upward its 2023 growth projection for the Philippines to 5.5 percent from the previous estimate of 5 percent after seeing the strong numbers recorded in the fourth quarter of 2022.
It backed up the higher growth estimates with declining Covid-19 cases in the country, the reopening of borders, the strong rebound in private consumption and investments and the steady increase in private sector credit.
It says further progress on attracting foreign direct investments and promoting structural change and boosting productivity, including the agricultural sector, could raise the potential growth to about 6.5 percent and closer to the government’s numbers.
Respective financial institutions like the IMF are optimistic on our growth and investments prospects. I will be the last person to disagree with them.