°' L. XI
•
NO. i
..
: January- February 1993 ..
..
..
" ::
:
..
..
ISSN 0115-9097 :
. .
•
.
":.
i
.
Attracting Foreign Direct Investment to the Philippines by Dr. Mario
B oLamberte
In the last two years, the Philippine government has initiated several bold measures to attract foreign investment to the country. One of the most significant measures is the passage of the Foreign Investments Act (FIA) of 1991, which liberalizes the entry of foreign investors. Specifically, restrictions on the extent Of foreign ownership of export-oriented enterprises have been removed, Foreigners may own as much as 100 percent of the equity of domestic-oriented enterprises, unless their equity participation is prohibited or limited to a smaller
The FIA was accompanied by the phased liberalization of the foreign exchange markets that began in the mid-1991. Towards the second half of 1992, foreign exchange controls have been reduced to the barest minimum, For instance, foreign investors are now entitled to full and immediate capital repatriation/dividend/interest remittance privilege without prior Central Bank approval. Exporters may retain and use freely all their export receipts.
percentage by existing laws or by the provisions of the Act.
Although the liberalization measures have provided a better
Trends In Investment
Foreign•
Direct:
Drained of resources, and compared to any other time period in its history, the Philippines needs infusion foreign investments more thanof ever in the uncertain
Asian Institute of Tourism (A1T) Hotel. Their participation in Philippine development was dis_ cussed,
1990s. Dr.MarioB. Lamberte,PIDS Vice-President, discusses the fac-
Three Pulong Saliksikan sessi0ns were held during the last two
tors that
attract direct foreign
oo
environment for foreign investments, they would be rendered ineffective if other determinants of foreign investments remain unfavorable. This paper therefore tries to examine the important determinants of foreign direct investment (FDI) with the view of suggesting policies that would complement the liberalization measures to attract more foreign investment to the country. As a percent of GNP, the gross FDI seems to be small. Except in 1973, 1976-1977 and 1987-1990, it was less than 1 percent The highest ratio occurred in 1988 at 2.8 percent. Table 1 shows the gross in flow, outflow and net FDI during the period 1970-1990. The data are taken from the balance-of- payments table which are based on the reports submitted by banks to the Central Bank. They therefore reflect actual flows. _
In absolute
i i!iiii:! i:i'
Our unheralded partners in Philippine progress, the various volunteer were recognized during thegroups, observance of Intema-
months of 1992. Ms. Lorelei de protected commodities. Dr. Danilo Israel gave insights oncatfish consumption in the US. American SantosAmerica," allayed • lawyer fears of aLeonard "fortressNorth
] /7 S i d o_ %= : :PI_/ _$a:liksilian::_::::::::: _i!:5:Sessi6_ _rN0_,_l)_i:i))_ !::i:i@: _::December1992 _____________i___________________________);______ :.). ...::::"i:):.:..:.).:i).:..:.....:.:.:i.
tional Volunteer Day on De.tuber
in view of the implementation of
:.::_!_:):_::_:::::VOiu_te_rJfn_.:._":.:..:.. ).:::.:.'...:):i:i:.
2, 1992, whenwas a conference on volunteerism held at the
the North American .Free Trade Asteement(NAFTA).. ...
_:•i•_••_!•••_:ch_g_:_•i:•:_••_•)••)•••• _' J:.._-------- . .......... -- :.,.........,:.:.. .................... :._::::.,.,:=..;_