Foreign investment pledges down

Investment commitments of foreign firms dropped by a tenth last year, dragged by year-on-year declines during the last two quarters or the first six months of the Duterte administration, the latest Philippine Statistics Authority (PSA) report showed.

In 2016, foreign investment commitments to seven investment-promotion agencies declined 10.7 percent to P219 billion from P245.2 billion in 2015.

The PSA report reflected approvals made by the following IPAs: Authority of the Freeport Area of Bataan, Board of Investments, BOI-Autonomous Region in Muslim Mindanao, Cagayan Economic Zone Authority, Clark Development Corp., Philippine Economic Zone Authority and Subic Bay Metropolitan Authority. IPAs give away fiscal and nonfiscal incentives to investors.

Foreign investments commitments during the first six months of the Duterte administration or the second half of 2016 were down 18.9 percent to P152.4 billion from P184.2 billion the year before.

In the fourth quarter alone, approved foreign investments dropped 9.3 percent to P125.7 billion compared with P138.6 billion a year ago. Last December, the PSA reported that foreign firms’ investment pledges during the third quarter of 2016 or the first three months of the Duterte administration plunged 45 percent to P26.7 billion from P48.6 billion in the same period of 2015.

In the first half of 2016, foreign investment commitments granted tax and other perks grew 14.8 percent to P66.6 billion compared with the P58 billion worth approved during the first six months of 2015.

The approved foreign investments “represent the amount of proposed contribution or share of foreigners to various projects in the country as approved and registered by the IPAs,” which consist of equity, loans and reinvested earnings, the PSA explained.

According to the PSA, the top three sources of investment commitments in 2016 were the Netherlands (P49.4 billion), Australia (P32.4 billion), and the United States (P31.4 billion).

The three sectors that received the most pledges last year were manufacturing (P95.9 billion); electricity, gas, steam and air conditioning supply (P55.6 billion), and administrative and support service activities (P25.7 billion).

When foreign investment commitments were combined with pledges of Filipino investors, the seven IPAs generated a total of P686 billion in 2016, down by only 0.1 percent from P686.9 billion in 2015.

The sector for which the IPAs received the highest combined amount of investment pledges from foreign and local investors last year was electricity, gas, steam and air conditioning supply, with P215.9 billion in commitments.

A total of 195,971 jobs will be generated by the IPA-approved projects, up 15.9 percent from the 169,075 jobs expected to be created by investment pledges in 2015.

Economists had expected investment figures to be weak in the first few months of a new administration as investors await clearer policy directions going forward.

This year, investments are expected to pick up as the government fast-tracks key infrastructure projects mainly through the flagship public-private partnership (PPP) program.