Foreign investment pledges down 38.8%

Commitments made by investors from overseas dropped by almost two-fifths in the second quarter, latest Philippine Statistics Authority (PSA) documents showed.

From April to June, the foreign investments registered with seven of the country’s investment promotion agencies (IPAs) reached P36 billion, down 38.8 percent from P58.8 billion in the same three-month period last year.

The seven IPAs covered by the PSA documents were the Authority of the Freeport Area of Bataan, the Board of Investments, the BOI-Autonomous Region of Muslim Mindanao, the Cagayan Economic Zone Authority, Clark Development Corp., the Philippine Economic Zone Authority and the Subic Bay Metropolitan Authority. IPAs dangle tax and other perks to attract both local and foreign investors.

For the January-to-June period, foreign-led investment pledges totaled P73.4 billion, a 32.7-percent decline from the P109.1 billion recorded during the first six months of 2013.

In the second quarter, the top sources of foreign investments were Cayman Islands (P10 billion or 27.7 percent of the total), Singapore (P7.8 billion or 21.6 percent) and British Virgin Islands (P5.5 billion or 15.2 percent).

In terms of sector, manufacturing enjoyed the biggest inflows of foreign-led projects during the second quarter, with pledges worth P18.5 billion or 51.4 percent of the total. Foreign investments in real estate amounted to P7.2 billion or 19.9 percent of second-quarter approvals, while accommodation and food service projects hit P5.5 billion to account for 15.2 percent.

Combining foreign pledges with commitments of local companies, the seven IPAs approved P257.8-billion worth of projects in the second quarter, up 45.8 percent from P176.8 billion last year. Filipino firms contributed P221.8 billion or 86 percent of the investments that were granted perks from April to June.

The sectors that generated the largest investment commitments from foreigners and Filipinos during the second quarter were electricity, gas, steam and air conditioning supply activities (P167.1 billion or 64.8 percent of the total), real estate (P25.4 billion or 9.9 percent) and manufacturing (P24.6 billion or 9.5 percent).

The foreign as well as Filipino-led projects registered with the seven IPAs during the April-to-June period are projected to create 118,835 jobs, 186-percent higher than the 41,552 jobs in the same period last year. Nine out of every 10 jobs resulting from the second-quarter pledges were contributed by foreign investments.