Oxford Economics cites the Philippines as one of the countries with a low scorecard for Foreign Direct Investment (FDI). The country persists in having insufficient resources and business situations, according to the UK think tank.
Philippines, least attractive for foreign investments according to Oxford Economics
The Philippines ranked 13th (second to the last) on Asia-Pacific (APAC) economies regarding the FDI attractiveness scorecard. Oxford Economics noted that the country gained negative scores on infrastructure and logistics, political and business climate, and market size and potential.
The leader in economic forecasting added that the Philippines ranked low because of inadequate infrastructure. The country also did worse than its neighboring countries in the 2020 World Bank Ease of Doing Business report. However, the country earned positive scores when it comes to export networks, including labor dynamics.
“Indonesia and the Philippines both score high in terms of their labor dynamics. Ongoing urbanization and a relatively young workforce mean that we expect the labor supply in these two economies to rise by 25 million over the next decade. We also forecast their average annual earnings to be around a third lower than in China in 2029,” said Oxford Economics.
It also noted the country’s endeavor to minimize corporate tax rates and plans to assuage obligatory local employment for foreign investors. Economic managers anticipate gross domestic product to rise by 4% to 5% this year and 7% to 9% next year, following a 9.6% contraction last year.
Oxford Economics claimed that poor rankings in FDI add a burden to its forecast. It is said that the Philippines will endure deep economic distress because of the Coronavirus pandemic. The country ranked 95th among 190 economies in the World Bank’s report that is already discontinued.
China, as the top destination for FDI
China is once more to become the leading country for foreign investments. Based on the Oxford Economics new FDI attractiveness scorecard, the country appears to be the most attractive. It is amenable for over 9% of global FDI over the next decade.
Alternatively, the share of global FDI is possible to curve lower between 2020 to 2029. During that period, the structure of foreign investment into China remains to develop. Besides, the country itself will become the birthplace of foreign investments in the region. Foreign investments will become particularly adapted towards services and meeting China’s domestic market needs.
Vietnam, on the other hand, will benefit from supply-chain adjustments because of its adjacency to China. It includes low wages and contributions in trade agreements.
However, Vietnam still needs to restructure its reforms to boost its ability to do business in the region. According to Oxford Economics Asia economist Sian Fenner, it should also ensure sufficient education to improve the product’s scalability.
She added that they ranked Malaysia third for FDI inflows over the next decade. Indonesia ranked sixth, after India. The Philippines remains to be one of the least attractive for foreign investments. The country experienced economic scarring because of the pandemic. They project the country’s GDP to remain at 8.4% in 2025, which is lower than its pre-pandemic forecasts.
Simultaneously, advanced economies are less likely to gain because of their high wages and challenging demographic perspective. Taiwan is an exception, in which the US-China tensions resulted in some manufacturing reshoring of Taiwanese multinationals.
Additionally, the FDI settings in advanced economies became more retraining since the pandemic. In fact, Australia, Japan, and South Korea commenced stricter screening regulations which will moderate future FDI.