FDI in the Philippines

Overview by Globlatrade.net:

FDI in Figures

Foreign direct investment (FDI) had clearly decreased since 2008 due to the unfavorable international economic environment; however, it has started to rebound again in 2010. Considering the comparative advantages of the Philippines, such as:  English speaking and well-skilled manpower, a strong cultural proximity to the United States, its geographical location in a dynamic area, the FDI flow in the Philippines is rather weak.  This can be partially explained by the fact that the country is evolving into a service society, with a low capital strength, which means a need of  minimal equipment.  In addition, the government favors subcontracting agreements between foreign companies and local enterprises rather than FDI in the strict sense of the term.  Lastly, corruption, instability, inadequate infrastructures and not enough juridical security discourages investment.

Foreign Direct Investment 200720082009
FDI Inward Flow (million USD) 2,9161,5441,948
FDI Stock (million USD) 20,46321,61123,559
Performance Index*, Ranking on 141 Economies 112122110
Potential Index**, Ranking on 141 Economies 7780-
Number of Greenfield Investments*** 97140120
FDI Inwards (in % of GFCF****) 13.86.311.6
FDI Stock (in % of GDP) 14.212.914.6

Source: UNCTAD

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.


FDI Inflows By Countries and Industry

Main Investing Countries 2009, in %
Japan 58.1
The United States 10.6
Korea 7.9
Hong Kong 3.2
Singapore 2.8
United Kingdom 2.8
Switzerland 2.1
Thailand 2.0
China 1.9
Netherlands 1.7
Main Invested Sectors 2009, in %
Manufacturing sector 70.7
Financial and Real Estate 13.5
Private Services 8.9
Water 2.2
Agriculture 2.0
Electricity 1.7

Source: Board of Investment

Form of Company Preferred By Foreign Investors
Joint-stock company
Form of Establishment Preferred By Foreign Investors
A company
Main Foreign Companies
Lafarge, Philips, Shell, Intel, Texas Instrument, ING, Cemex
Sources of Statistics
Philippine Board of Investment

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Why You Should Choose to Invest in the Philippines

Strong Points
The country's main strong points are:
- A skilled English-speaking workforce;
- A large domestic market;
- Its membership to ASEAN;
- A favorable investment policy;
- A very advanced legal system;
- A strategic location at the Asian gateway; and
- Considerable natural wealth.
Weak Points
The country's weak points lie in its political instability, the bad quality of its infrastructures, judicial precariousness and lack of transparency.
Government Measures to Motivate or Restrict FDI
Laws liberalizing business practices have opened up more fields to foreign investments and have provided foreign investors with the same incentives as ASEAN members, as well as simplified procedures.

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