TRADE Secretary Alfredo Pascual boasted a few weeks ago that $19 billion worth of investments pledged during the 24 foreign trips of President Ferdinand Marcos Jr. have already been actualized or have commenced implementation "as of June" this year.

That is a lie. Even if one assumes that Marcos' or his wife's sheer charm or eloquence convinced some foreign companies to invest in the Philippines, Bangko Sentral ng Pilipinas data show that actual direct investment inflows into the country (excluding reinvestment of earnings, which aren't inflows) in the first 21 months of Marcos' rule totaled only $3.3 billion, or a sixth of Pascual's figure of $19 billion.

Pascual has the gall to lie using the reports on foreign investment proposals registered and approved with the Board of Investments (BOI). But these are mere proposals, often by companies, to see how much tax inventiveness they can be given. Pascual, though, is intellectually dishonest in that he doesn't mention the fact, which is well known in his department and in the academe, that the BOI's reported approved investments usually account for an average of 16 percent of actual foreign inflow.

Marcos has been using as an excuse for his gallivanting around the world the claim that in each and every trip, he has been getting "billions and billions" of pledges. I've been on such trips before when I was in government, and those pledges are empty for-show announcements, as most are undocumented. For the billions and billions of dollars that Marcos officials have claimed he got companies to invest here in every trip, his officials have never identified such companies.

Concocting

Trade and industry officials have been so used to concocting such lies that right after Marcos' visit in October in 2023 to Saudi Arabia, the DTI claimed "investment agreements worth $4.26 billion with Saudi businesses." Most of this, though, or 87 percent, the Presidential Communications Operations Office claimed involved "a human resource services agreement worth $3.7 billion between Al-Jeer Human Resources Company-ARCO and Association of Philippine Licensed Agencies."

The Saudi company wasn't at all investing that astounding amount of $3.7 billion in the Philippines. It's an estimate by one bureaucrat of the total amount of salaries for an undetermined number of years for overseas Filipino workers (OFWs) potentially to be recruited by the Philippine agencies in the country and deployed by the Al-Jeer Human Resources. How much did the BSP report Saudi Arabia invested in the Philippines in 2023? A measly $1.2 million, $4 million from 2019 to 2023.

The slowdown in foreign investment inflows, in fact, has been a major factor in the fall of the peso's value, from P55 to the dollar when Marcos assumed office in July 2022 to P58.6 last Friday, exerting an upward pressure in the cost of even the most ordinary items that Filipinos buy.

We are, in fact, moving toward a foreign capital crisis, as even the inflows in 2023 and the first quarter involved just two big-ticket investments made long before Marcos took power, as the $149 million Lufthansa Technik Philippines to expand its hangar and facilities at Clark Freeport.

Stark drop

The drop in foreign investments under Marcos becomes stark if one compares the total during President Rodrigo Duterte's first 21 months in office. From July 2016 to March 2018, foreign investments totaled $5.124 billion. During Marcos' first 21 months in office, these inflows totaled $3.327 billion, a 35 percent decrease from that of Duterte's. (See figure)

The usual, rather obvious reasons have been given why the Philippines has not been as attractive to foreign investments as its neighbors. The US State Department annually publishes its "Investment Climate Statements" for many countries.

For the Philippines, it practically cuts and pastes the following paragraphs from past statements, as the following for 2023: "Poor infrastructure, high power costs, slow broadband connections, regulatory inconsistencies, a cumbersome bureaucracy and corruption remain disincentives to investment. The Philippines' complex, slow, redundant and sometimes corrupt judicial system inhibits the timely and fair resolution of commercial disputes. Traffic in major cities and congestion in the ports remain barriers to doing business."

The elephant in the room, though, in discussions of Philippine economic problems, is what endangers our further impoverishment: our belligerent stance against China, which obviously has been the US machination, if not outright order to the President.

Bellicosity

Marcos' bellicosity against China has already taken us to very dangerous grounds. China is our biggest trading partner, accounting for 20 percent of exports and imports. It could reduce its trade with us which would be disastrous for us, but will hardly affect Chinese consumers and businessmen since the Philippines accounts for only 2 percent of their total trade. And if China does reduce its trade with us, our economy would be hit, and that would make it unattractive to other foreign investors. Why invest in a country on which China has imposed trade sanctions, if ever?

Our quarrelsome policy toward China actually has already hit us, most clearly in the decline of foreign investment inflows, because it has been undertaken in a unique period consisting of two interacting factors. Our unfriendly foreign policy toward China really has been an offshoot of the US overarching moves to contain China from becoming a superpower in the guise of its declared "Pivot to Asia" policy started in 2009.

As a result, either worried over that such a Cold War between China and the US would be on the same scale as that between the US and the USSR in the 1950s to 1970s or outrightly with the prodding of their government, American big businesses, especially those in hi-tech sectors, have been moving out of China.

Rather than returning to America (as Trump wanted them to), US and European businesses have been moving to our competitor in terms of low wages, Vietnam. Despite its serious territorial claims against China, which in the 1970s led to violent conflict with the superpower in the Paracel and Spratly archipelagos, Vietnam's wise leaders have put their territorial dispute with China on the back burner.

Vietnam

What country would investors decide to invest in: Vietnam, which has no conflict with China, or the Philippines, with photos splashed in newspaper pages almost every week of Filipino vessels in open fights with China Coast Guard vessels — which one day could result in an all-out violent skirmish? Which country would you choose, a country with nine military bases scattered all around the archipelago aimed at seven Chinese military bases in the South China Sea, aimed reciprocally at US bases? Indeed, as the Association of Philippine-China Relationship chairman said, even breaking out in tears: "I would not want my country to be a battleground."

Well, neither would foreign investors want to invest in a battleground.

In fact, Chinese investments in "China-is-not-our-enemy" Vietnam have surged from $4.5 billion in 2023 to $2.9 billion in 2021. In the starkest of contrasts, Chinese investments in the Philippines peaked in 2019 at $326 million (including those from Hong Kong), declining every year since then that in 2023, there was a disinvestment of $40 million.

Even companies of our beloved ally, the US, have been moving into Vietnam, either by leaving China altogether or putting their expansion facilities into that country. As a result, US investments in the Philippines have slowed down from $296 million in 2019 to just $113 million in 2023. Since its noticeable move to Vietnam in 2019, US companies have invested $11 billion in Vietnam by 2023, 11 times the $973 million in American investments into the Philippines.

Unlike Marcos, Vietnam's leaders have not been touring the world to convince foreign capital to invest in their country.

Huge investments

US giants like Intel, Cargill, Nike, AES, Murphy Oil, First Solar, Boeing, Apple, SpaceX, Coca-Cola, Foxconn (the main supplier of chips for Apple), Citigroup, Nike, Chevron, Ford, and KFC have made huge investments in Vietnam — many after 2011 when President Benigno Aquino 3rd stared our hostile stance vs China.

It is a gross betrayal of the country and sheer servility to Marcos that the trade and industry and economic management officials have been claiming that that under his rule, foreign investment flows into the country have been booming.

A Board of Investments press statement even boasted: "The BOI hitting the trillion mark in investment approvals proves that the Philippines is heading in the right direction to become Asia's premier investment destination of choice." The truth is that from being the 2nd or 3rd largest recipient of foreign investments several years back, we have fallen to 6th place, ahead only of Cambodia, a war-devastated nation. Economic Planning Secretary Arsenio Balisacan, the other day, astoundingly claimed we are on track to achieving upper-middle income status by late next year. How can we be on track when capital inflow has been falling?

If our officials keep being deluded about how attractive we are as an investment site, they fail to have an understanding of what factors are making us so unattractive. And if they can't see these, then removing these blocks is just impossible.

Our economic officials should demand that their boss sit down with them for a no-holds-barred discussion to tell him: "If you don't change your anti-China foreign policy, we're screwed and will become very seriously screwed. Can't you see that?"

And the only chance for the country's foreign policy toward China to be reversed is for the sole architect of our foreign policy, the President, to be changed. Alas, that would require another political upheaval, the kind that has been responsible for our two periods of severe economic recession.

What an unlucky country we have become.

Facebook: Rigoberto Tiglao

X: @bobitiglao

Website: www.rigobertotiglao.com

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