Business World, 15 November 2012


There is a huge disparity between the promise and the reality. President Aquino would usually announce the promise of more foreign direct investment (FDI) every time he arrived from abroad. Yet, foreign direct investments, the type that lead to more factories and modern farms, and consequently, more decent-paying jobs, have yet to come — two and a half years after Mr. Aquino took over Malacañang.

In August 2012 foreign direct investments in the Philippines plunged by 83%. FDI registered a net inflow worth $13 million in August, down sharply from $76 million in the same period last year.

The Bangko Sentral ng Pilipinas (BSP) was quick to blame the poor and uncertain global economy for this dismal performance. The decline, BSP said, “reflected investors’ relatively cautious stance due to weak global economic prospects and financial strains in the advanced economies.” Really? What a lame excuse.

If true, how come our ASEAN-5 neighbors continue to attract FDIs? Last year, the Philippines attracted a measly $1.3 billion. By contrast, Malaysia attracted $10.8 billion, Indonesia $18.2 billion, Thailand $9.6 billion, and Vietnam $7.4 billion.

But BSP continues to put on a brave face. BSP said that despite the sharp fall in August, the year to date FDI, at $1.04 billion, was still 61.2% higher compared to the same period last year. The only reason, year-to-date FDI looked good this year is because last year’s FDI was horrendous.

Are we supposed to be ecstatic with an FDI inflow at $1.2 billion? That’s barely enough to put up three medium-sized cement plants. That’s not even close to the 11-year average FDI of $1.5 billion during the last 11 years (2001-2011).

Assuming that the Philippines achieves its revised FDI target of $1.2 billion this year, the average FDI inflows during Mr. Aquino’s two-year term would be approximately $1.2 billion. That’s pitiful. It pales in comparison with what our ASEAN-5 neighbors received last year: Malaysia, $10.8 billion; Indonesia, $18.2 billion; Thailand, $9.6 billion; and Vietnam, $7.4 billion.

Has it occurred to Filipino policy makers that we’re not attracting a decent flow of FDI because they have not done enough?

To date, perceptions of corruptions persist. Infrastructure continues to crumble. The grand promise of public-private partnerships in delivering public infrastructure projects has been stalled. The first-ever PPP project under the Aquino administration that has been awarded, the Daang Hari project, has yet to get off the ground.

Power supply is not only very costly, it is unreliable. Power outages are now commonplace in Mindanao and parts of the Visayas. And a large scale power shortage is looming in a few years, depending on how slow or how fast the economy performs.

Where progress is expected, there were setbacks. The Philippines performed badly in the “ease of doing business” category. Instead of moving forward, it lost four ranks since Mr. Aquino assumed the presidency. The Palace spokesman was quick to blame local authorities for this poor rating. Really?

There’s serious trouble in the mining sector, which is now facing an imminent free fall.

Recent developments — the Supreme Court decision on foreign ownership and the issuance of a more protectionist List A by the Board of Investments — have made potential foreign investors think, pause, and ask: Is the Aquino administration serious in its program of attracting FDIs into the country?

I think our leaders should seriously review why foreign investors continue to bypass the Philippines. Instead of looking for excuses, they should seriously search for real reasons why the country continues to fail to attract FDIs. And then, finally, they should buckle down and address such reasons with hard work and perseverance.

Here’s my favorite quote from Benjamin Franklin on making excuses: “He that is good for making excuses is seldom good for anything else.”