PH among top investment sites for transnational corps

By Louella D. Desiderio, The Philippine Star

Nov. 4, 2013

MANILA, Philippines – The Philippines is among the top destinations for investments chosen by transnational corporations (TNCs), according to a survey conducted by the United Nations Conference on Trade and Development (UNCTAD).

UNCTAD’s World Investment Prospects Survey for 2013 to 2015, showed that the Philippines was among the top 19 prospective host economies chosen by TNCs.

The Philippines shared the 19th spot with Hong Kong and Turkey.

The survey, conducted between February and May this year, was based on 161 responses of TNCs and 64 responses of investment promotion agencies (IPAs).

The survey showed that China was the most preferred destination for investments, while the US and India got the second and third places, respectively.

Other countries which made it to the list of top prospective host economies were Brazil, Germany, Mexico, Thailand, United Kingdom, Japan, Russian Federation, Vietnam, Australia, Poland, South Africa, Canada, France and Malaysia.

Asked about priority regions for foreign direct investments (FDI), TNCs that responded to the survey have ranked developing country regions such as East Asia and Southeast Asia as highly important, with response rates of 64 percent and 58.6 percent, respectively.

The rising importance of these regions as destinations for FDI does not come at the expense of developed regions though, as the survey results also showed that the European Union and North America remain among the most important regions for FDI by TNCs.

In terms of FDI expenditure prospects compared to 2012, 46 percent of TNCs said they will spend more this year, while 40 percent will match last year’s and 14 percent will reduce the amount to be spent.

For next year, 48 percent of the TNCs said they will increase their FDI expenditures, while 41 percent will spend the same, and 11 percent expect lower spending.

For 2015, 48 percent of the TNCs said they will hike their FDI expenditures, while 47 percent will be spending the same and five percent will be spending less.

The survey also showed that TNCs were still uncertain or undecided about the international investment climate this year, with only 20 percent saying they are optimistic.

The TNCs have a better outlook for 2015 though, with more than 50 percent saying they are optimistic or very optimistic of the investment environment.

“As TNCs maintain a cautious approach for the current year, FDI in 2013 will remain close to the 2012 level. However, as investors regain confidence, FDI flows could rise in the medium term,” the UNCTAD said.

“There is also the possibility that FDI recovery could be delayed further if the significant risks continue to prevail,” it added.

The UNCTAD said in its World Investment Report 2013 released earlier that FDI inflows for this year are projected to be at the same level as last year’s, with an upper range of $1.45 trillion.

As confidence in the investment environment improves, the UNCTAD said the FDI flows are expected to reach levels of $1.6 trillion next year and $1.8 trillion in 2015.

But while TNCs are still cautious of the investment environment, IPAs were more optimistic in their assessment of the global investment climate with 29 percent saying they have a positive outlook on the investment environment.

For 2015, 78 percent of the IPAs said they are optimistic of the investment environment.

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