Trump Effect: FDIs eroded by uncertainties

Malaya Business Insight | January 30, 2017

Foreign direct investments (FDI) to the Philippines are yet to catch up with Vietnam’s as inflows are threatened by back-to-back uncertainties both in the country and in the United States, one of its biggest investors.

John Forbes, senior advisor at the American Chamber Commerce of the Philippines, in an interview on the sidelines of the Brewing@AIM breakfast forum last Friday, said while Philippine-US relations remain strong, “headwinds in the Asia-Pacific” are creating uncertainties

“Uncertainty deters investments. New investments in the Philippines may slow down, and are slowing down because of the uncertainties created here (in the Philippines), uncertainties created in Washington,” said Forbes, referring to the Philippines and the US.

“In the near term, because of the uncertainties, companies will delay their investments, said Forbes.

But he does not see any withdrawals of existing investments.

Forbes said the “Trump effect” or the impact of his nationalistic policies like America First, the planned end of offshoring act and import taxes should be considered.

“Historical US-Philippine bilateral relations are extremely strong. Recent leadership changes in both countries are resulting in many new policy directions with unclear results. It will take time to sort outmodified relationships,” Forbes said.

Overall, Forbes sees the Philippines attracting FDIs “but still not as high as Vietnam’s.”

Amcham itself projects FDIs to hit $10 billion.

FDIs to Vietnam have reached over $20 billion in 2015 against the Philippines’ $6 billion in the same year.

“The Philippines is still on the map of US companies in Southeast Asia,” Forbes said at the forum.

According to Forbes, it now makes sense for the Philippines to forge a free trade agreement with the US while still pursuing its participation in the Regional Comprehensive Economic Partnership.

He said it is still also in the interest of the Philippines to be part of the Trans Pacific Partnership, even with the US now out of the agreement.

Forbes added the Philippines can take advantage as well of its improved relations with China and the continued strong ties with Japan.

Source: http://www.malaya.com.ph/business-news/business/trump-effect-fdis-eroded-uncertainties