Indications have showed that the Philippines is well on its way to full economic recovery, a huge inflow of foreign direct investments (FDIs) into the country last year and a surge of foreign exchange reserves to a record high in February this year.
In a statement, the National Statistical Coordination Board ( NSCB) said that total approved FDIs in the country in 2011 reached 256.1 billion pesos (6.03 billion U.S. dollars), or a growth of 30. 6 percent from the previous year's level.
The NSCB, an agency of the National Economic and Development Authority (NEDA), said this was the highest level of approved FDIs in a single year since 1996. NEDA is the highest economic planning body of the government.
According to NSCB Secretary General Romulo Virola, FDI applications last year also exceeded the 241.1 billion pesos (5.67 billion U.S. dollars) recorded in 1997, before the Asian financial crisis hit.
Virola said that of the total FDIs in 2011, the Philippine Economic Zone Authority (PEZA) accounted for 193.6 billion pesos ( 4.56 billion U.S. dollars) while the Board of Investments (BoI) recorded investment commitments worth 23.2 billion pesos (513.27 million U.S. dollars).
Investments registered with PEZA grew by 36.2 percent and with BoI, by 4.1 percent.
In the first two months of this year, investment pledges registered with PEZA surged by 47 percent to 16.22 billion pesos ( 358.85 million U.S. dollars), from 11.04 billion pesos (259.76 million U.S. dollars) in the same period last year, owing to the country's improved business investment climate.
PEZA Director General Lilia de Lima said that the growth in investment commitments is expected to be sustained until the end of 2012, due to the large number of prospects in the pipeline, particularly projects of Japanese firms that are coming to the Philippines to either relocate or expand their operations.
"This is our banner year.. Our best bet is still Japan (for investments). I'm very happy with our Japanese investors, they treat our people well, so we want to invite more Japanese investors into the country,"De Lima said last week on the sidelines of the 500,000-unit production milestone of Toyota Motor Philippines Corp.
In terms of country of origin, Japan accounted for 77.4 billion pesos (1.82 billion U.S. dollars) of the FDIs approved, accounting for 30.2 percent of last year's total.
Investment commitments from investors based in the United States reached 70.4 billion pesos (1.66 billion U.S. dollars), or 27.5 percent of total, while 28.3 billion pesos (665.88 million U. S. dollars), or 11.1 percent, came from the Netherlands.
Earlier, the Bangko Sentral ng Pilipinas (BSP), the country's central bank, also reported that the country's foreign exchange reserves in February surged further to a record high of 77.77 billion U.S. dollars.
The BSP said that the surge in the country's gross international reserves (GIR) in February was due to foreign currency inflow like remittances and foreign portfolio investments or hot money, dollar-denominated loans secured by the national government and earnings by the BSP from its investments in foreign securities.
The latest GIR, an indicator of the country's ability to service its debts to foreign creditors, pay imports and engage in other forms of commercial transactions with the rest of the world, rose nearly 22 percent from 63.89 billion U.S. dollars in the same period last year.
BSP Governor Amando Tetangco Jr. said that the rising foreign exchange reserves showed the country's improving ability to service its maturing obligations with foreign creditors and "thus make the country worthy of better credit ratings."
The Philippines, after getting favorable credit-rating actions last year, is hoping for another round of upgrades from various international rating agencies to finally hit investment grade.
The country's credit ratings with Moody's Investors Service and Standard & Poor's both stand at two notches below investment grade, while that with Fitch Ratings stands at a notch below.
In its latest assessment of the Philippine economy, the International Monetary Fund (IMF) said the Philippines' growing foreign exchange reserves will keep the country safe from shocks brought on by problems now gripping the global economy.
The Washington-based multilateral institution said that the Philippines' GIR of 77.77 billion U.S. dollars by the end of February would be sufficient to allow monetary officials of the country to respond to sharp capital outflows, a risk emerging economies now face due to global economic uncertainties.
"Should volatile (capital) outflows occur, there is scope to use reserves to smoothen the effects of such outflows,"the IMF said.
According to the IMF, in times of uncertainties, foreign investors tend to withdraw their funds from emerging markets, like the Philippines, preferring to hold on to their cash or put their money in what they consider to be less risky assets.
As a result, emerging market currencies, such as the Philippine peso, is prone to sharp depreciation.
But in the case of the Philippines, the IMF said that the BSP has enough resources to intervene in the foreign exchange market, particularly by using its dollar reserves to control the peso, preventing any sharp and sudden depreciation of the local currency./.