Here's another one for the books on Manny Pacquiao: The Filipino boxing hero's reported gross earnings from his recent bout with British opponent Ricky Hatton was just $4 million shy of the $16 million foreign investments that the entire Philippines attracted in February.

Excluding pay-per-view earnings, Pacquiao reportedly earned $12 million for winning the "Battle of East versus West: Pacquiao vs Hatton match" last May 2 at the MGM Grand Garden Arena in Las Vegas, Nevada. He knocked out the much-hyped British boxer in less than 6 minutes.

Unlike the power punching Pacquiao, however, the Philippines has been losing out in striking investment deals with foreigners. In February, the inflow of FDI, or foreign direct investments, fell by 82 percent compared to the $90 million receipts in the same month last year.

FDIs are considered a better vote of foreigners' confidence in the Philippines than "hot money," or those that are invested in listed shares or debt issues of local companies. FDIs are usually invested in industries that create employment and spur downstream ventures. These foreign funds usually stay for the long haul and tend to help lift long-term economic growth rates.

Lower than peers

In the first two months of 2007, the Philippines received $1.418 billion worth of FDIs, already considered a record high. In that year, FDIs as a percentage of the country's total fixed investments was only 14.7 percent. It paled against the 20 to 30 percent ratios posted by peers in Asia, such as Malaysia, Indonesia, Thailand. FDI inflows in the Philippines in 2007 was just a few notches above Cambodia's.

Rapid economic growth of Asian neighbors coincided with high FDI levels, observed Justin Wood, head of Economic Intelligence Unit's Southeast Asia desk. Wood visited the Philippines and briefed the press about Philippines' prospects late last year. He said low FDIs to the Philippines has contributed to the Philippines' move "from relative wealth to relative poverty." He tracked Asian countries' per capita gross domestic performance from 1981 to 2007.

The factors that make the Philippines a laggard in FDIs are not new. Business groups have perenially cited the cost of electricity, which is the second highest in Asia next to Japan. This has largely discouraged investments in factories, which could have been the main sources of jobs. To cope with lack of job opportunities at home, almost 4,000 Filipinos leave the country every day for jobs abroad.

Corruption, coups, red tape

Foreign investors have also cited corruption as a major setback. Among Asian countries, the Philippines ranked second to Cambodia at the bottom of Transparency International's Corruption Perception Index.

Wood added that foreign investors have also been put off by political shocks, including power grabs like coups d'etat.

In the World Bank's report on "Doing Business in the Philippines for 2009," the Philippines is ranked 140 out of 181 economies in terms of ease of doing business. The higher the rank, the more difficult to do business in that country.

It requires 15 procedures, takes 52 days, and costs 29.76 percent gross national income per capita to start a business in Philippines. It takes and costs less to start a business in Malaysia, Thailand, New Zealand, and even in Laos.

The report noted that, "Cumbersome entry procedures are associated with more corruption, particularly in developing economies. Each procedure is a point of contact, a potential opportunity to extract a bribe. Analysis shows that burdensome entry regulations do not increase the quality of products, make work safer or reduce pollution. Instead, they constrain private investment, push more people into the informal economy, increase consumer prices and fuel corruption."

Sign of resilience

Nonetheless, the Bangko Sentral ng Pilipinas (BSP), which monitors the FDI, said in a statement that despite the dramatic decline, the fact that there were still investors seeking investment opportunities in the Philippines "was an indication of resilience considering that the global economy was itself receding."

FDIs in the first two months of the year, which amounted to $64 million, went into real estate, financial intermediation, trade and commerce sectors. The BSP said there was a net outflow of $63 million, which consisted largely of intercompany borrowing and lending between multinational companies' headquarters and local subsidiaries and affiliates here.

The BSP said it expects FDIs for the entire year to reach $700 million as investors hold back their plans to invest in the Philippines in the midst of the global economic recession. In 2008, FDIs reached $1.4 billion, with most foreign funds going to power and telecommunications. (abs-cbnNEWS.com/Newsbreak)

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