Ventures

Foreign investment flows fuel economic expansion in Southeast Asia.

- ALEX MAGNO

The Philippines, alas, gets a very small share of this inflow – a factor that might constrain our growth into the medium term.

Growth is important. It is the only way to bring down poverty rates. The rising tide, as they say, lifts all ships.

Also, we need to maintain a certain rate of growth to outpace our mounting national debt. A large portion of next year's budget will go to debt servicing, even as our legislators have produced a draft budget that maximizes looting and limits the productivity of our economy.

There are many things that inhibit the flow of investments into our economy. Our infrastructure is poor. Our policies are constantly shifting, depending on the swirl of domestic politics. Corruption levels are scandalously high. Power costs are intolerable, especially for energy-intensive industries. Our labor costs, given efficiency levels, are comparatively high.

There are other factors that deserve more attention in making our economy more attractive to investments. We have a small corporate sector and a tiny capital market. Access to capital is therefore more prohibitive.

We ordinarily imagine direct foreign investments as money coming in raw and directed to stand-alone projects. This is why our leaders make so much about going abroad to lobby large companies to invest in the country. We designed policy reforms such as the CREATE MORE Act to provide incentives for stand-alone investments.

There are abundant opportunities to draw investments through joint ventures, however. But to draw these investments, we need corporations that are well-run, innovative and imaginative. The better governed our corporate sector is, the more joint venture investments we could attract.