Philippine investment pledges climbed to a record last year as Japanese companies plan expansions, boosting prospects for the Southeast Asian nation’s economic growth, Trade Secretary Gregory Domingo said.
Government approvals for projects increased 2.3 percent from a year earlier to $15.9 billion in 2012, according to a presentation posted on the Investor Relations Office website. Manufacturing was the “fastest-growing sector in the past two quarters, surpassing services,” Domingo said at a government economic forum in Manila today.
President Benigno Aquino is increasing spending to a record this year while seeking more than $17 billion of investments in roads and airports to spur growth to as much as 7 percent in 2013. China’s rising costs and its territorial dispute with Japan have prompted Japanese companies to shift more operations to Southeast Asia, helping the Philippine economy expand 6.8 percent last quarter from a year earlier.
Ten foreign companies, including Canon Business Machines Philippines Inc. and Murata Manufacturing Co., have moved some operations to the Philippines because of its improving cost competitiveness, according to the IRO presentation. They accounted for about $400 million in investments last year, with half coming from Japanese companies, it said.
“Japan is now our largest investment source and trading partner,” Domingo said. “We’re seeing huge interest from Japanese companies to set up plants here. We seem to have this advantage now because of the rising labor cost in China.”
Higher tax revenues will help boost infrastructure spending to 5 percent of gross domestic product by 2016 from 2 percent now, Finance Secretary Cesar Purisima said in the forum today. The government increased levies on tobacco products and alcoholic beverages last month, and expects the move to raise 184.3 billion pesos ($4.5 billion) over four years.
A peace deal signed with Muslim rebels last October is forecast to bring about $1 billion in investments to Southern Philippines. The country may win investment-grade status this year as growth is sustained, central bank Deputy Governor Diwa Guinigundo said today.