Angelei T.

Dineros International Political Economy

AB Foreign Service – FS301 Jumel G. Estrañero

Foreign Direct Investment in the Philippines: Auspicious or Adverse?

Recently, a web-based magazine US News & World Report published that the Philippines was on
top of the list of “Best Countries to Invest In”, The scores were computed from “global
perceptions” of survey respondents. Foreign direct investment (FDI) is an investment in a
business by an investor from another country for which the foreign investor has control over the
company purchased it is also a commitment by a country to another to invest a certain amount
of money for a long term. It encompasses management, joint venture, transfer of technology
and expertise. Also, an individual or business could own 10 percent or more of a foreign
company. Furthermore, refers to an investment made to acquire lasting interest in enterprises
operating outside of the economy of the investor.
Foreign Direct Investments has a lot of advantages, it increases employment because it provides
job opportunities to foreign country for they invest businesses in this particular country,
automatically they will be needing some human resources or labor, it also increases the external
capital on one’s state for they provide extra incomes aside from local incomes coming from the
GDP. Furthermore, tax revenues also increase for every product being purchased has an
corresponding tax that was imposed by the local government. And in return, Foreign Investor,
they will be able to establish some business outside their countries and they will be able to
access different resources that they needed. Especially if they invest in a developing country,
they will be able to have a much cheaper labor that provided by the foreign countries. If there
are advantages, there are also disadvantages, first, the competition between foreign investors
and local investors will be present. Also, there would be some interferences in local business
because of these investors. Furthermore, the risk of capital outflows will increase because there
will now have this division of capital between local and international investors.
Aside from Singapore, Japan, the Netherlands, US and Luxemburg, China and India are other
countries where Philippines can directly engage to when it comes to economic cooperation. We
all know that China has its developing relation to Philippines despite of the territorial disputes.
They are now expanding its economic relation with the Philippines through telecom companies.
Chinese businesses are rampant in the Philippines. We can see the evidence to the products
that are marketed among Filipinos. That’s why if we consider the historical background of the
Philippines and PRC, we can see that they have a long-term relationship when it comes to
investments. Moreover, Top Indian conglomerates pledged about $1.25 billion worth of
investments that may generate 10,000 new jobs in the Philippines on the sidelines of President
Duterte’s attendance at a regional summit with Indian and Association of Southeast Asian
Nations (Asean) leaders here. (Yap,2018). This shows that India has also expanding its economic
relations with the Philippines. This investment will provide job opportunities in the said country
and can contribute to the growth of economic system of the Philippines.
Philippines is a developing country, thus there are still a lot of major challenges that Philippines
facing when it comes to Foreign Direct investments stability and instability. The recent major
challenges are terrorism and the issue on war on drugs. These issues hinder and constrain
foreign investors to invest in our country. Terrorism can cause instability among businesses
because of mass destruction brought by terrorist attacks. Also, the war on drugs campaign of
President Rodrigo Duterte brought fears especially when it comes to human rights protection
and because of these Extrajudicial Killings, Philippines are now considered as unsafe country for
foreigners to travel and invest. This directly affects the economic growth of the Philippines.
Because of Globalization, the competitiveness among states increases. Businesses try to utilize
their resources to innovation. Thus, this affect the outflow and inflow of foreign direct
investment in the Philippines. More companies try to invest in a developing country like
Philippines for they provide the much cheaper labor and human resources. They establish
investments that will help their countries to achieve a more sustainable environment.
The Philippines should engage in other countries, international and regional organizations for
them to be able to have a partnership with them that will bring investments in our country.
They should also increase its productivity and utilize investments for them to attract foreign
investors to invest in our country. Third, the Philippines should solve its domestic problems or
internal problems. For them to have a good image among states and will bring more
opportunities in the country. Fourth, they should establish more tourist spots and landmarks
that will attract the investors to invest businesses that will utilize this tourist spots. Lastly, we
should utilize the use of social media to promote peaceful image in international community
and promote our natural resources that can be access once they invest in the country.