MANILA, May 9, 2005
 (STAR) By Des Ferriols - The Bangko Sentral ng Pilipinas (BSP) expects foreign direct investments (FDI) to surge this year and reach $1.2 billion and higher in 2006 once mining investments start pouring in.

The BSP said over the weekend that foreign direct investments in 2005 would improve faster than expected because of the continued strength in business process outsourcing as well as manufacturing.

BSP Deputy Governor Amando Tetangco Jr. told reporters that foreign direct investments were lower last year because of political uncertainties the previous year.

This year, however, Tetangco said there was more optimism among long-term investors.

"The estimates we have for this year were based on approvals last year and the proceeds for the projects are expected to come in this year," Tetangco said.

According to Tetangco, the 2005 estimates indicate that 2006 FDIs could be even better once big-ticket mining projects start to come in.

The estimated 2005 foreign direct investments would be more than double the $506-million investments recorded in 2004, Tetangco said.

"This year’s inflows include only small amounts for mining which is the main growth area we are looking at in the coming years," he said.

Tetangco said this year’s foreign direct investments also included projects in the power and manufacturing sector.

"Business processing outsourcing is also particularly strong," he said.

Exporters have estimated that in 2004, the growth in BPOs was largely underestimated. Official record placed total revenues at $400-million worth of exported services but industry estimates showed the actual number was closer to $1.7 billion in 2004.

According to Tetangco, BPO and mining would be the driving factors for FDI growth this year as well as the next, provided the investment climate continues to improve.

In BPO alone, the government has been pushing the industry to capture at least 20 percent of the US market for business process outsourcing, equivalent to about 180,000 to 200,000 seats.

The Department of Trade and Industry (DTI) reported that investments in information technology grew 23 percent last year to P6.42 billion, with an expected 19,000 new jobs to be generated. Government figures show 69 percent of the new investments, or P4.46 billion, were in call centers.

BPO is defined as the "delegation of one or more IT-intensive business processes to an external provider that in turn owns, [administers], and manages the selected processes, or processes based on defined and measurable performance metrics."

Reported by: Sol Jose Vanzi

All rights reserved