Why Are Foreign Firms Keen on Investing in the Philippines

By: Arvie Midel

The Philippines is regarded as one of the greatest countries to invest in. Foreign companies and experts see significant potential in the country, which has undergone rapid economic expansion in recent years. As a developing country, the Philippines has enormous potential to accelerate its economy by means of foreign and domestic investment. In turn, the government encourages these enterprises to prosper and contribute to the country’s expanding economy. Currently, one of the greatest investments is on the real estate industry side given that the performance of real estate in today’s time is definitely booming because of the underlying factors such as competitive investment costs and the strategic location since the Philippines is considered as a gateway to the region.

According to a survey done by HSBC Commercial Banking, which noted the “growing confidence” of foreign corporations in the opportunities of Southeast Asia, 21% of those respondents chose the Philippines as the next expansion target.

In this article, readers will learn more about foreign investments in the Philippines as well as the status and movement of the domestic market. To understand more, here are the things everyone should know:

Foreign Investment in the Philippines

The Philippines possesses all of the characteristics that each business seeks. Its strategic location offers it a gateway to both Asian and Western markets. The administration is open to foreign investment. Finally, the country is continually striving to build more effective operations. Additionally, one of the main reasons why foreign investors are interested in starting enterprises and building empires in the Philippines is the country’s abundance of natural resources. It is one of their most significant competitive advantages. Natural resources help to support the nation, which is why they are a vital aspect of their economy.

The Philippines, popularly known as the Pearl of the Orient, has been identified as one of the top countries for foreign investment. It has been ahead of many other countries due to its ongoing positive outlook on the country’s economy. It is predicted to remain among Asia’s fastest-growing economies. Many investors have already expressed their joy and satisfaction with locating their businesses here. With that, enterprises are eager to establish or grow their presence in the Philippines, demonstrating their confidence in the country as an investment destination. Meanwhile, those companies with a strong local presence intend to expand their activities during the next two years.

Factors Influencing Foreign Firms’ Desire to Invest in the Philippines

Strategic Location

The Philippines is known for its welcoming gateway to the region. Foreigners can easily travel to various regions and nearby countries in a few hours, making it an important entrance point into the ASEAN Free Trade Area market. Aside from that, a lot of people intend to invest in the Philippines given that there are a lot of opportunities in the country since it is very open to various businesses, especially around NCR where the real estate industry is very well known.

As an investment hub and a good starting point for Asia-Pacific expansion plans, the Philippines, which is positioned in the heart of Asia, has grown significantly. It serves as a crucial entrance point for more than 500 million people in the ASEAN Market and is situated about 4 hours flying distance from the region’s major metropolitan centers.

Increased Investment Security

There are different types of investments in the Philippines that have already showcased great results and it truly proved that hard-earned money can be used for a good cause and long-term benefits. Investors believe that the Philippines offers more security than India in terms of investment safety. Why? It is because the Philippines has stronger savings and incentives than other Asian countries. People can safely invest in the real estate industry since it has been tested by a lot of investors already.

The Philippines promotes foreign investment to create jobs, support economic development, and contribute to the country’s future prosperity. With that, foreign direct investment is highly encouraged. Foreign direct investment (FDI) is a type of cross-border investment in which a citizen of one economy develops a long-term interest within and exerts substantial influence over any resident of another economy.

Government Assistance Towards Foreign Investment

The Philippine government is committed to assisting and promoting foreign investments. This can be observed in how the government promotes foreign investors, such as by granting tax incentives and accelerating company registrations to make it easier for foreign investors to establish their enterprises. As a result of these initiatives, investors in the Philippines benefit from a comparably simpler and better business environment. It is proven that the country has a big pool of accessible workers, making it an appealing investment destination for firms.

High-Quality Employees

The labor in the Philippines is youthful, educated, and abundant. The country is thought to have one of the most competent English-speaking workforces in the world, making it perfect for organizations looking to grow and expand through skilled employees. Other benefits for investors include cheaper labor and training charges. Even in a foreign country, Filipinos are being hired because of their hard work and compassion towards other people.

What Are the Examples of Foreign Investment in the Philippines?

The stock of FDI grew in 2021, reaching USD 113 billion. The United States, China, the United Kingdom, Singapore, and Japan have traditionally been the primary investors, with inflows concentrating on transportation and storage, electricity, the real estate industry, manufacturing, and infrastructure. Foreign investment occurs when foreign corporations invest in domestic enterprises with the intent of actively participating in their day-to-day operations and critical strategic expansion.

To conclude, access to the market, access to resources, and cost reductions are all advantages for a corporation operating in a foreign market. Disadvantages for the business include an unstable and unpredictable global economy, unstable political systems, and fragile legal systems. Nevertheless, the Philippines is a popular investment destination, with an annual economic growth rate of 6%. Its strong macroeconomic fundamentals and democratic framework make it an appealing investment destination for companies and investors.

Read more: Entering the Golden Age: Why the Philippines is the Ultimate Investment Destination

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