THE GOVERNMENT needs to enhance its statistics-gathering capabilities to better track investments and address data shortcomings that limit its ability to assess how investment approvals are yielding foreign direct investment (FDI), according to a House of Representatives think tank.
The Congressional Policy and Budget Research Department (CPBRD) said it has found that higher investment approvals have boosted FDI in the short term, though it is less confident in drawing conclusions for the long term due to data limitations.
“The data… indicate that most firms commence commercial operations in the year of registration. However, it must be emphasized that the full realization of investment pledges often extends beyond the first year of operations and may occur incrementally over a longer period,” CPBRD study author Mark Carmelo R. Manguera said.
“Limitations in the current data underscore the need for more robust statistical systems to provide a definitive answer, including the operationalization of the Integrated Investment Statistical Framework,” he added.
The Fiscal Incentives Review Board (FIRB) reported that of 949 firms, 51.7% exceeded their investment pledges, 22.7% met their commitments, and 26.3% have started operations but have yet to fulfill their pledges, the think-tank found in its review of investment promises.
“The analysis of the FIRB data, while constrained due to certain limitations… (showed that) the majority of firms are able to fulfill their investment commitments, with some even exceeding their pledged amounts,” the CPBRD said.
The think tank’s analysis of investment and FDI flows also indicated that “increases in one often influence the other.”
“Nonetheless, these findings must be interpreted cautiously due to limitations in the data,” it said.
The inability to accurately assess whether increased investment pledges have led to a boost in FDI inflows should prompt the government to strive to better understand the data, according to the CPBRD.
“One cannot address, improve, or intervene in areas that are not properly measured. Reliable data collection and analysis are essential for identifying issues, tracking progress, and formulating effective policies,” it said.
Having accurate data on the investment pipeline would enable the government to enhance its framework to better convert investment pledges into actual investments and help identify specific countries or sectors to target for further investment promotion.
The data could also serve as a basis for amendments of the investment laws to make them more receptive to market conditions, the think tank said.
“The availability of data for proper monitoring and evaluation of laws will provide crucial inputs to enhancing policies, such as adjustments to the minimum paid-up capital requirement under the Retail Trade Liberalization Act, employment requirements under the Foreign Investments Act, and equity and sector restrictions under the Public Service Act,” it said. — Kenneth Christiane L. Basilio