Foreign Direct Investments and Market Competition in the Philippines

Abstract

This study investigated the current situation of the Philippine economy concerning Foreign Direct Investments (FDIs). Barriers to foreign direct investment (FDI) in the Philippines are highly restrictive. The Foreign Investment Act (R.A. 7042, 1991, amended by R.A. 8179, 1996) states that at least 60% of the business should be owned by a Filipino citizen, and the remainder can be owned by a foreign investor. FDI restrictions lead to a lack of competition in the country which reduces the need to invest because of the increased oligopolistic power. Oligopolies are the ones that benefit from profits, influence the law, and prevent foreign competitors to enter the Philippines.

Keywords: Economic Growth, GDP, Net Inflow of FDI, Financial Depth, ASEAN, Philippines Market Structures, Oligopoly, Monopoly, FDI, foreign direct investments, FDI policy restrictions, investment barriers, competition, employment opportunities, FDI trends, FDI outlook

JEL Classification: A1, A20, A21, A22, A23, F12, F13, F18, F21, F24, F35, F63, F64, F68, G18, K23, L1, L12, L13, L51, G2