Answering the statements about ‘falling Investments’

By: John Carlo Tria

SOME members of Philippine Senate opine that we have been losing foreign direct investments (FDIs) and that this is bringing our economy down.

They go on to blame political instability and the government’s war on drugs for such an outcome. One senator claims that our FDIs are down 90%.

While these all may sound compelling at first glance, a rudimentary fact check reveals deep truths that challenge the first impression of a “faltering economy.”

A closer look at these assertions, however, reveals two major flaws.

First, we fact checked the statements of one senator claiming that our FDI figures have gone down by 90%.

By accepted international definition, FDIs do not only consist of new investments by new companies. International banks define FDIs to also include reinvested income and capital infusions of companies with some level of foreign ownership.

Thus, any money flowing through these investments are defined as FDI. To insist only on new funds from new companies is therefore misleading. Apparently that’s what the Senator was insisting.

Forgotten were the expansions of currently located companies, which, if included, would increase the FDI, and would have reduced the “decrease” to about 16%, not 90%.

His pronouncement pushes the idea that despite consistent growth, our economy is unattractive to investments, and that growth will fall. This frightens those not versed in economics.

The second flaw is that it purports to show an economy seemingly unable to draw investments.

The truth is that while Foreign Direct Investment figures are slightly down, total investment figures, which combine foreign and local sources, are up compared to last year, as the Philippine Statistics Authority (PSA) shows:

“Approved investments of foreign and Filipino nationals in the first quarter of 2017 grew by 21.8 percent, amounting to PhP 121.5 billion from PhP 99.7 billion registered in Q1 2016. Pledges from Filipino nationals stood at PhP 98.6 billion accounting for 81.2 percent of the total approved investments during the quarter.”(PSA June 15)

In the second quarter the PSA reports that investments of foreign and Filipino nationals even increased to PhP 230.5 billion, an increase of 29.7 percent from previous year’s PhP 177.7 billion.

These numbers show that contrary to the mistaken notions, if not peddled falsehood of s failing economy, local investments have pushed total investments up. This is bolstered by the fact that the International Monetary Fund (IMF) and the Asian Development Bank in the last two weeks both affirmed steady and consistent GDP growth with the IMF at 6.6%

We look forward to continued growth, and will look beyond political statements to understand it.

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