#BeyondElections2016 | Research group IBON pointed out that growing foreign investment under the Aquino administration has not improved the country’s jobs situation. This, as the presidentiables vow to continue the major economic policies of the incumbent administration, which has made attracting foreign direct investment (FDI) a key strategy for inclusive growth.
IBON noted that annual net FDI flows have been growing rapidly under the Aquino administration: US$2.0 billion in 2011, US$3.2 billion in 2012, US$3.7 billion in 2013, US$5.7 billion in 2014, and US$5.7 billion in 2015. Yet despite this the number of new jobs created has fallen from 1.1 million in 2011 to just 638,000 in 2015. The 534,000 increase in underemployed over the same period also indicates worsening quality of work. The decline of the labor force participation rate, to 63.7% in 2015, is also likely a sign of increasing numbers of discouraged job-seekers.
According to IBON, the weakening job creation and rise in poor-quality or low-paying and insecure work confirms how foreign capital in itself is not a solution to the country’s long-standing jobs crisis. The government’s neoliberal framework to FDI where too many incentives and too little requirements are made on foreign capital has to be corrected.
The biggest amount of net FDI flow went into manufacturing (US$3.1 billion), financial and insurance (US$1.2 billion) and real estate (US$661.6 million). In 2014, 64% of manufacturing sector revenue in the Top 1000 companies in the Philippines were accounted for by transnational corporations. Yet, like those in financial and insurance activities and real estate activities, these investments were for big foreign and local business ventures that are disconnected from the domestic economy and contribute little to broad-based national development.
IBON said that FDI will not contribute to national development if the government does not actively assert its sovereignty over foreign capital in the domestic economy. This includes enforcing Filipino equity limits, ensuring growing local content and domestic reinvestment, and requiring real technology transfer. These measures contrary to the neoliberal economic framework of the Aquino and past administrations are necessary to benefit from FDI.
The next administration should also give greater focus on developing the economy from within, such as by genuine land redistribution, real agricultural development, and Filipino-driven industrialization. Foreign investment should be a means to support these and is not an end in itself. The refusal of past governments and the present one to undertake these are the reasons for the country’s chronic jobs crisis. ###