Filipinos working abroad send money to Philippines to invest in local businesses. During Asia’s ongoing financial crisis, the issue of effective policies for recovery and long-term growth is critical. The handling of foreign investors is one area of particular interest. Foreign direct investment (FDI) has played a significant role in many of the region’s economies, especially in export-oriented sectors. It has been a critical source of foreign capital during the crisis.
FDI has been a key factor for money transfers to Philippines and driving export-led growth in Southeast Asia, despite accounting for a small percentage of total investment or jobs in each economy. Foreign companies have not been the only players, but they have played a vital role in the fastest-growing export sectors, such as electronics. Host economies have increasingly transformed from agriculture and raw material exploitation to major producers and exporters of manufactured goods as a result of such investment.
Why Is Philippines Behind The Race Despite Of Foreign Development Investment In The Country?
Despite the FDI inflows and online money transfer to Philippines by foreign worker Filipinos, the Philippines continues to lag behind regional peers, in part due to the Philippines’ constitution, which restricts foreign investment, and in part due to the threat of terrorism in some areas. This can be explained in detail by the fact that the country is transforming into a service society with low capital power, requiring only the most basic equipment. Furthermore, rather than FDI in the strict sense, the government prefers subcontracting arrangements between international companies and local businesses. Finally, factors such as corruption, insecurity, and insufficient infrastructure, as well as high power prices, a lack of legal protections, tax controls, and limits on foreign ownership deter investment.
What Is The Reason By Emerging Market Of Foreign Direct Investment In Philippines?
The main reason behind FDI development in the country is, the government has several comparative advantages, including an English-speaking and well-skilled workforce, close cultural ties to the United States, exposure to a developing market, and a strategic position in a competitive area. Although FDI inflows to Southeast Asia fell by 31% in 2020, FDI inflows to the Philippines increased by 29%, reaching USD 6.4 billion, owing primarily to M&A deals in agriculture and oil. Due to the emerging digital finance system in the country, investors found it easy to send money to Philippines online for investment purposes.