Press Release
September 12, 2008

RP needs long-term investments -- Loren

Senator Loren Legarda cited the need for the country to attract more long-term foreign investments to spur economic growth, create much needed jobs, and alleviate poverty.

"We need foreign investor who would stick with us through thick and thin, and who will not leave in huff at the slightest sign of trouble," said Legarda, chair of the Senate Economic Affair Committee.

Legarda said that the country has abundant skilled workers to entice foreign companies to set up their industrial or business operations here.

Legarda issued the statement in reaction to reports that so-called hot money are flowing back to the local stock market as a result of the plummeting prices of oil in the world market.

The latest Bangko Sentral report showed that the country drew $187.5 million in net foreign investments in August, compared to the $20.2 million investment inflow in July.

"The problem with hot money is that it comes in today and is gone tomorrow," she said, citing as example the large investment outflow last March triggered by inflation.

While inflation remains high at this point, observers say that foeign investors are once again drawn to the Philippines because of the BSP tougher stance against inflation, in which it jacked its benchmark interest rates by a total 100 basis points.

The upsurge in foreign investment in the last two months was seen as sharp contrast to the large outflows seen since March when inflation rose in the face of the spiraling prices of global food and fuel prices.

'Hot money' refers to foreign investment collection in stocks, bonds and bank products which are all volatile in nature.

For instance, foreign investments registered with the Central Bank aggregated $740.5 million, 72 percent of which is listed in the Philippine Stocks Exchange.

Legarda said that any investment coming into the country is good, but that what the country needs are long-term investments, as exemplified by business processing firms, and technology-based companies.

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