Nope, investments aren’t coming, they’re slowing to a halt
THERE was a puff piece the other day in this paper on the Ferdinand Marcos Jr. administration titled “The investments are coming.” That claim is totally untrue that it borders on being fake news.
The Chinese investments the author referred to, by the Panhua conglomerate, were all announced, and the capital for these actually plunked down during President Rodrigo Duterte’s administration four to six years ago.
Specifically, these were announced during Chinese leader Xi Jinping’s state visit here in 2018; obviously, his message to the country was that a closer relationship with China that Duterte had made would attract major investments from the now capital-rich superpower. This was reflected in the $199 million uptick in investments in 2018 and $276 million in 2019. In contrast, there has been no surge so far under this regime. Instead, a major decline is obvious. (See table).
Bangko Sentral ng Pilipinas data show that Chinese investments — which the author of that piece was referring to — as well as those from all other countries — have been steeply falling, that we might be headed for a foreign exchange crisis.
Capital from China has gone down precariously from $276 million in 2019 at the height of Duterte’s administration to, under Marcos, $16 million in 2023 and from January to May this year to $4 million.
Actually, foreign direct investments from all countries fell by a huge 44 percent, from $2.29 billion in 2019 to $1.29 billion in 2023. The decline would have been steeper if the BSP — as it should not have done — hadn’t classified as a foreign investment about $700 million that the Aboitiz Group spent to get a 40 percent stake in the local Coca-Cola Bottlers, as the local group could have sourced such money only from the local financial market unless it has foreign accounts abroad, e.g., the British Virgin Islands.
That piece wasn’t an opinion column but obviously a bungling PR piece for Marcos: the surge in Chinese investments, it claimed, was the result of this president’s hard work (or charm, the author doesn’t say), convincing the Chinese during his state visit in January 2023 to pledge $23 billion in investments to the country. That’s fake news.
Either Marcos or his officials were lying, or the Chinese backtracked on their word. From 2022 (which includes investments that could have come in from January to June 2022, when Duterte was still president) up to May this year, Chinese investments totaled a measly $36 million, or less than a percent of that touted $23 billion “pledges.” Those from Hong Kong were negative $66 million, which means that there was much disinvestment in the Philippines.
Yet the author of that piece still got to distort facts by telling us that he visited China two weeks ago with a group of media men, and “personally met” with Xinghua Li, chairman of the Panhua conglomerate. “And no less than Mr. Lit confirmed that his group, in partnership with another company — Alsons Group — would be investing in the Philippines.”
That fake-news author went to rattle purported Chinese investments coming into the country because of their confidence in Marcos:
“Initially, the Panhua-Alsons partnership will roll out a $3.5 billion steel manufacturing plant in Maasim, Sarangani, in the first quarter of 2024. Most probably, this is part of the $7.32 billion for electric vehicles and mineral processing that BBM had secured.
“Once fully operational, the steel manufacturing plant in Sarangani is expected to produce at least 10 million tons of galvanized steel, color-coated steel coil and steel slab, among others.”
“Mr. Li disclosed that Alsons, which operates a P27.5 billion coal-fired plant, also has a pending application before the Philippine Economic Zone Authority to expand the Kamanga Agro-Industrial Ecozone Development Corp. to include the 92-hectare Kamanga Agro-Industrial Ecozone.”
Those are indeed facts. But the investments were made during Duterte’s administration, seeing fruition only in the past three to four years, because it takes that long for such major industrial projects, such as steel mills and coal-fired plants to be undertaken.
Alsons is owned by the Davao-based Alcantara clan, which had been longtime supporters of President Duterte. The two brothers Nicasio and Tomas Alcantara donated at least P30 million to the Duterte campaign in the 2016 presidential election. These facts bolster the fact that these huge Chinese investments were made during Duterte’s administration and not during Marcos’. Indeed, these purported Chinese investments were not reported in the BSP’s records for 2022-2024 during Marcos Jr.’s incumbency but certainly were in 2018 and 2019, during Duterte’s watch.
These investments were all reported in media from 2018 to 2019, among these with the following headlines:
– “Chinese steel company to locate to Mindanao,” Nov. 20, 2019 press release of the DTI
– “Chinese steel giant Panhua wants a bigger slice of Duterte’s infrastructure boom,” bilyonaryo.com, Sept. 20, 2019
– “Industry: Panhua Integrated Steel Inc. (in the Philippines),” Panhua Group Co. Ltd., www.panhuagroup.com., 2019
– “Chinese firm to put up steel plant in Mindanao,” inquirer.net., Nov. 22, 2018
– “Chinese steel firm eyes larger PH market with Mindanao plant,” September 2019
– “China’s Panhua group to invest in Sarangani,” press release of the municipality of Malungon, Sept. 20, 2021.
It’s obvious this writer doesn’t read newspapers, or he would know that critical writers like me would immediately have an “I’ve read this before” feeling.
“How’s that for a failed BBM China trip?” the author sarcastically wrote, referring to critics of the administration “who were quick to dismiss BBM’s claim of Chinese investments, claiming they were either empty promises by the Chinese investors or simply make-believe stories concocted by the President.”
He should have asked, “How’s that for a colossal credit-grabbing operation?”
I have been testing the AI app chatgpt.com, and while it is not always accurate, its answers to my question of why Chinese investments in the Philippines are dropping seem to be right on the dot.
“Chinese investments in the Philippines have been declining due to several factors:
Geopolitical tensions. The ongoing territorial disputes in the South China Sea have strained relations between the Philippines and China. These tensions have made Chinese investors more cautious about committing to large-scale investments in the Philippines.
Regulatory and political uncertainty. The Philippines has undergone significant political changes and shifts in regulatory policies. These changes have created uncertainty for foreign investors, including those from China, leading to a more conservative approach to investment.
Economic challenges. The global economic environment, including the impact of the Covid-19 pandemic, has led to economic slowdowns in both countries. China’s slowing economic growth and the Philippines’ challenges in infrastructure and ease of doing business have also contributed to the decline in investments.
Diversification of Chinese investments. China has been diversifying its investments to other Southeast Asian countries where the political and economic environment might be perceived as more stable or beneficial, such as Vietnam and Indonesia. These countries offer competitive advantages that attract Chinese capital.
Concerns over debt trap diplomacy. There has been growing concern in the Philippines over the potential risks associated with heavy reliance on Chinese loans and investments, particularly the fear of falling into a ‘debt trap.’ This has led to a more cautious stance by both the Philippine government and the private sector.
These factors, combined with the Philippines’ complex regulatory environment and competition from other countries, have contributed to the decline in Chinese investments.”
Facebook: Rigoberto Tiglao
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Nope, investments aren’t coming, they’re slowing to a halt
Source: Breaking News PH
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