PH among the least attractive for foreign investors
The Philippines ranked second last among 14 Asia-Pacific economies ranked by UK-based Oxford Economics in attractiveness for foreign direct investment (FDI) due to poor infrastructure and its ranking in terms of competitiveness.
In a report released Monday, Oxford Economics’ chief economist for Asia, Sian Fenner, ranked the Philippines only ahead of Taiwan in the think tank’s latest FDI attractiveness scoreboard.
First was China, followed by Vietnam, which Oxford Economics said was “poised to continue to benefit from the restructuring of the supply chain.”
Malaysia, India, Australia, Indonesia, South Korea, Hong Kong, Japan, New Zealand, Singapore, and Thailand also ranked higher than the Philippines.
The scorecard measured the dynamics of the workforce, the quality of infrastructure and logistics, the political and business climate, the size and potential of the market, and the structure of exports.
Oxford Economics said medium-term FDI prospects in Asia-Pacific remain “strong, although supply disruptions from a pandemic and uncertainties over the pace of the recovery may cause some companies to rethink their supply chains ”.
But in the case of the Philippines, which is among the region’s least attractive FDI destinations, “adds weight to our forecast that the extent of the economic scars caused by the pandemic will be particularly large,” Oxford Economics said. .
The strength of the Philippines and Indonesia lies in their workforce, Oxford Economics noted. “Ongoing urbanization and a relatively young workforce mean that over the next decade we expect the supply of labor in these two economies to increase by 25 million. We also expect their average annual earnings to be about a third lower than China’s in 2029. ”
But “the Philippines and Indonesia both perform poorly in terms of infrastructure and the business environment,” Oxford Economics said, citing the latest Global Competitiveness Report where the Philippines ranked 92nd out of 140 countries for the quality of infrastructure.
This was the reason behind the ambitious “Build, Build, Build” program of the Duterte administration, which wanted to fill the previous infrastructure gap, in particular road connectivity and electrification which performed poorly in the field. global competitiveness report.
“The Philippines and Indonesia also do poorly in terms of the ease of doing business for companies. According to the World Bank’s Ease of Doing Business 2020 report, they both rank 70 or more out of 190 countries, comparing themselves unfavorably to advanced Asian economies and many of their regional peers, ”Oxford Economics added. The annual report on the affairs of the Washington-based lender was halted this year as part of an ongoing investigation into alleged data irregularities in previous years’ reports.
Oxford Economics nonetheless highlighted moves in the region to attract more FDI. “The Philippines has lowered the corporate tax rate to 20% from 30% in early 2021 and plans to ease mandatory local employment conditions for foreign investors,” he noted, referring to the Law on Business Recovery and Tax Incentives for Businesses or the CREATE Law.
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