Q1 foreign investment pledges plunge to lowest level since 2010

Investment commitments from foreign firms fell by more than a third year-on-year to P14.2 billion in the first quarter, the lowest quarterly level since 2010, the Philippine Statistics Authority reported Thursday.

The PSA’s latest report on total approved foreign investments showed that the first-quarter approvals of seven investment promotion agencies (IPAs) slid 37.9 percent from P22.9 billion in the same three-month period last year.

The foreign investments approved from January to March this year were the lowest since the second quarter of 2010 when approved projects amounted to only P13.8 billion.

The PSA data reflected the following IPAs’ approvals: 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 extend fiscal and nonfiscal incentives to investors in government-preferred areas, which the Duterte administration wanted to rationalize under the proposed second tax reform package.

When these foreign investment commitments materialize, usually after a couple of years, they are then counted as foreign direct investments (FDIs).

In the first three months, the top sources of foreign investment pledges were Japan (P7.9 billion), the United Kingdom (P1.5 billion) and the Netherlands (P878.5 million).

Almost two-thirds of the commitments or P9.1-billion worth of projects would be poured into the manufacturing sector, followed by administrative and support service activities (P1.8 billion), and real estate (also P1.8 billion).

More than half of the value of foreign investment approvals or P7.4 billion would be for projects in Calabarzon (Cavite, Laguna, Batangas, Rizal and Quezon); P3.2 billion worth would be in Metro Manila, and P1.6 billion in Northern Mindanao.

In 2017, foreign firms’ pledges slid 51.8 percent to P105.6 billion from P219 billion in 2016, the lowest yearly figure since 2005’s P95.8 billion.

PSA data showed that foreign investors’ commitments declined year-on-year during six of the first seven quarters of the Duterte administration.

In the third quarter of 2017, foreign investment approvals registered an increase of 61.1 percent year-on-year to P43 billion.

But while foreign investment pledges were on a decline, total commitments or including those by Filipino companies climbed 52.3 percent to P185 billion as of March from P121.5 billion a year ago, the PSA said.

Local investors accounted for P170.8 billion or 92.3 percent of the total approvals during the three-month period.

“Foreign and Filipino projects approved by the seven IPAs in the first quarter of 2018 are expected to generate 33,704 jobs. This is 38.4-percent lower compared with previous year’s projected employment. Out of these anticipated jobs, 66.9 percent or 22,535 jobs would come from projects with foreign interest,” according to the PSA.