Foreign investors shunning Philippines: experts

Agence France-Presse

Posted at Feb 16 2010 06:54 PM | Updated as of Feb 17 2010 03:08 AM

MANILA, Philippines - The Philippines has lost ground as a destination for foreign investment during President Gloria Arroyo's nine years in power, a business consultancy said Tuesday.

"Almost everything today is worse than it was in 2000. You see the deterioration of most factors," said Peter Wallace, president of Manila-based AYC Consultants, which advises foreign investors.

Arroyo, who is required by the Constitution to step down as president on June 30, has launched a media blitz in recent weeks to highlight what she has described as the country's economic gains since she took office in 2001.

But Wallace said that foreign investment in the Philippines, if adjusted for inflation, would be lower under Arroyo than other presidents.

In a report released on Tuesday, AYC Consultants said net foreign direct investment only averaged $340 million a year from 2001-2008 compared with the average of $588 million from 1994 to 2000.

This is despite the effects of the Asian financial crisis for the earlier period, which began in late 1997, the report said.

Arroyo took office in 2001 after a popular uprising toppled her scandal-tainted predecessor, Joseph Estrada. She won re-election in disputed polls in 2004.

Wallace said the Philippines had enjoyed low inflation and high international reserves and a stable balance of payments under Arroyo.

But he attributed this to the actions of the central bank and the huge remittances of millions of Filipinos working overseas.

He said most Asian countries, except small ones such as Cambodia and East Timor, were getting more foreign investment than the Philippines.

AYC Consultants economist Benvenuto Icamina said that, to attract more investment, the Philippines would need to revise certain "discriminatory taxation" policies that favor local companies over foreign ones.

He also said the country needed to upgrade and modernize its infrastructure while improving its governance and cutting "non-tariff barriers" such as red tape.