Global Research Investments and the Philippines

In relation to the paper1 presented by Dr. Robert Atkinson, president of the Information Technology and Innovation Foundation (ITIF) last October 2007 before the Committee on Science and Technology, Subcommittee on Technology and Innovation, and the U.S. House of Representative.

Shown in Dr. Atkinsonʼs research, that in the last decade, 65 percent of U.S. companies increased their R&D investment in Asia, and that includes China, India, Malaysia, Singapore, and Korea.

With the news report dated, 20 January 2011, Dr. Atkinson's presentation becomes significant which stated that several of our neighboring countries enjoyed the 5-fold increase in foreign direct investments (FDI) last year while the Philippines has a recorded decline. The said report was based on the data released by the United Nations dated, 17 January 2011. Its beneficial effect is very obvious as FDI would definitely help in the long- term economic development and faster economic recovery for our country and not just relying in the short-term remittances of our OFWs. The R&D support and transfer of technology that comes with the FDI would definitely provide employment particularly to our researchers as this would also stimulate support and possible partnerships with our universities and private institutions. The factors that have affected its decline are the hesitation of the investors that adopted a wait-and-see attitude from our May 10, 2010 national election and the ensuing government transition, added by our countryʼs allegedly unattractive business climate.

According to the Global Investment Trends Monitor data provided by the UN Commission on Trade and Development (UNCTAD), Malaysia was projected to have grown its FDI by 410 percent to US$7 billion while Indonesia similarly enjoyed a 163 percent rise to US$12.8 billion. Singapore on the other hand, likely saw FDI level grow by 123 percent to US$16.8 billion. These improvements allowed inflows to South, East and Southeast Asia to rise by 17.8 percent to US$274.6 billion while the global average flattened to US$1.122 trillion last year, according to UNCTAD. With these high level of investments, our neighboring countries enjoy the benefit of faster economic recovery. For the Philippines, full-year estimates were not included in the report but the country, according to latest central bank data, recorded an annual 36.5 percent decline in FDI as of October 2010.

Based on the statement from the foreign business group officials, our countryʼs competitiveness was to blame. It is obligatory for our new administration, from the executive, legislative and judiciary to work together in order to improve our countryʼs investment image.

The paper of Dr. Atkinson would serve as a reference point that our country may adopt particularly on the R&D policies on tax incentives, subsidized research facilities, improvement on the infrastructure, and the availability of highly-qualified researchers, that other nations aggressively market, such as China and India, in order to attract global research investments.

Reference:

1 The Globalization of R&D and Innovation: How Do Companies Choose Where to Build R&D Facilities? by Dr. Robert D. Atkinson, 04 October 2007, itif.org/files/AtkinsonHouseRDOffshoreTestimony.pdf