In the first 11 months of 2019, foreign direct investment fell by nearly 30 percent from the same period in 2018, from $9.15 billion to $6.41 billion. This is according to the Bangko Sentral ng Pilipinas, which attributed the FDI decline to muted investor confidence and the uncertain global economic outlook.
This was even before the novel coronavirus forced the lockdown of entire cities in China, disrupting global supply chains and wreaking havoc on international tourism. The continuing nCoV threat struck during the Lunar New Year month – the peak travel season for the 1.4 billion people in China.
In the Philippines, which was also hit with the other whammy of Taal Volcano’s phreatic explosion on Jan. 12, the government is trying to drum up domestic tourism to make up for the cancellations due to the nCoV threat. People, however, are postponing even domestic travel plans as the coronavirus continues to spread like African swine fever.
Some quarters have warned that even the abrogation of the Visiting Forces Agreement between the Philippines and its treaty ally the United States could further dampen investor confidence, putting into question the reliability of its alliances at a time when the country badly needs to generate more jobs and livelihood sources.
The Germans have pointed out that the Philippines faces stiff competition from its Southeast Asian neighbors in attracting FDI, especially Vietnam. There is uncertainty over the loss of fiscal incentives under a proposed new law as well as the failure to respect the sanctity of contracts, according to German Ambassador Anke Reiffenstuel.
Investors have long expressed concern over inadequate infrastructure, red tape and restrictions on foreign business in this country. With nCoV adding to the woes, and the continuing threat of Taal’s eruption that could further disrupt businesses around economic zones, the government should be zealously pursuing measures to draw job-generating FDI away from the country’s neighbors.