Fdis and Country Attractiveness

Title: FDIs and country attractiveness

Country:  Philippines

Committee:  UNCTAD (United Nations Conference on Trades and Development)

The current situation with FDIs in Philippines.

Foreign direct investment (FDI) inflow is one of the key of globalization (Hamilton & Webster, 2012).  Asia has a potential of FDI inflow growing which is one of the world’s top in 2014.  However, the growing FDI inflow in Asia has dropped by 15 per cent in 2016, nonetheless in 2017 Philippines FDI rose by 43018.30 PHP Million which has led Philippines to strongest GDP growth since 2016 (UNCTAD, 2014 et 2017; tradingeconomics, 2017).  As the result of GDP growth rate 6.8 % in 2016 also, in the same year FDI inflow raised by 22.2 percent, which is higher than 2015 led Philippines’ economic rose over the other Asian countries such as Malaysia, Indonesia and Thailand (Koty, 2017) . This economic growth strategy seems to grow furthermore to 2017 which indicates the opportunity of developing country in Philippines.  So, currently Philippines GDP has developed by efficient FDI rose. This could lead Philippines to be an attractive country for the cross-investor border.

How are FDIs promoted and facilitated in Philippines?

The GDP rate rose in Philippines this supposes to be a benefit of FDI that effect promoting export product and service, such as gold and copper manufacturing, technology equipment, tourism, etc. Also, the political has been promoted since Philippines reformed government to be an independent country in 1986, the government aimed to open country to the international economy ever since. Philippines’ strength side includes language skills which English is the main language also Spanish is an alternative language. Furthermore, agriculture is a main productive fundamental in Philippines, natural resources (gold and copper), ASEAN membership, efficiently legal and policy, and national market. Philippines has more potential of an attractive country, for example, Japan and USA has nominated Philippines as a joint venture partnership. Besides government aims to attract the foreign investor by tax incentives, also a prospect of investing on gold and copper.  All these attractiveness, have turned Philippines into a prospect country that integrating various facilities for the foreign investor needs such as a gateway country, agriculture and farming. (Chanda & others; Chen, 2017; Goswami & others, 2012; Gronning, 2017; Ringuet & Estrada, 2003; Santander, 2017).

Factors pose the greatest constraint on FDIs in Philippines.

Mainly, the factors affect FDI found particularly includes natural resources, taxation, infrastructure and access links, Politics, also labour wages and skills (Pettinger, 2017).  Philippines as an island country which is benefit as a gateway country, however, this could be the main constraint that difficulty access to mainland like the other Asian countries, which is possibly one of geopolitical pressure (Gronning, 2017). The archipelago could be less attractive country to FDI, to invest in this country, it will cause encountering a massive cost of transportation, labour wages and taxation as Pettinger mentioned which they are the profit influence.  Besides, substandard politics which leads to insufficiency transparency and infrastructures effect the foreign investors decision as 21.6 per cent of Philippines population live in poverty despites GDP and FDI rate rose largely in Philippines (Philippines, n.d.; Santander, 2017; Yap, 2018).   These could be the greatest constraints on FDI in Philippines.

How can Philippines improve its business and investment climate in order to make it more attractive to FDIs?

The GDP rate has started growing since Philippines turned to democracy which affected FDI rate respectfully.  In this circumstance, when GDP and FDI rose it is possibly affect high demanding in the cross-border investment which involves labour demanding (Mankiw & Taylor, 2017). However, government should be aware that high demanding will affect high supplying both labour and technological service in the future as the economy expand into a macroeconomics. Philippines is made up by 7,000 islands which surrounded by the ocean sea (BBC, 2017), this cause the water crisis and poor sanitation (Jones, 2015; Kleeman, 2010; Philippines, Philippines, n.d.). Generally, government supposes to monitor population well-being for the first stage of improvement, unwell population will lead to unemployment further to less income which effects to poor GDP rate.  However, Philippines has faced the corruption since 1994 until 2017 (Campos, 2005; Magtulis, 2017), this indicate to government came from inefficiently politics, so mainly, the transparency seems to be the priority improvement.  The country which lack of transparency could cause the several hiccup consequences afterwards such as substandard politics, decision making of the foreign investment, and economy environment and these affect on FDI inflows.  Apart from obstacle that against on FDI, these substandard politics are unable reaching the United Union Sustainable Development Goals such as good health and well-being, industry, innovation and infrastructure. Additional, transparency improvement is an essential catalyst supports the facilities and investment climate towards FDI growth.

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References

BBC. (2017). World: Asia. Retrieved from BBC: http://www.bbc.co.uk/news/world-asia-15521300

Campos, J. a. (2005). Managing the politics of reform. Washington D.C., USA.

Chanda, A., Dargusch, P., McNamara, K., & Caspe, A. a. (2017). A study of climate-smart farming practices and climate-resiliency field school in Mindanao, Philippines. World Development V. 98, pp. 214-230.

Chen, Y. (2017). Has Exports Promoted Transformation of Economic Growth Mode> An Emprical Analysis Based on Multinational Cross-Panel Data. Retrieved from DEStech Transactions on Environment, Energy and Earth Science. (eesd): file:///C:/Users/User/Documents/fdi%20promoted%20in%20philippines.pdf