Foreign investment pledges surged 70.4% in Q2

Approved commitments from foreign investors jumped 70.4 percent year-on-year to P30.9 billion in the second quarter, bouncing back from the eight-year low investment pledges recorded at the start of the year.

The Philippine Statistics Authority’s (PSA) latest report on total approved foreign investments released Thursday showed the second-quarter approvals from five investment promotion agencies (IPAs) climbed from P18.2 billion a year ago.

The PSA report included approvals from the following IPAs: the Board of Investments (BOI), the Cagayan Economic Zone Authority, the Clark Development Corp., the Philippine Economic Zone Authority and the Subic Bay Metropolitan Authority. Two IPAs whose data used to be part of the report did not submit their second-quarter foreign investment approvals: the Authority of the Freeport Area of Bataan and the BOI-Autonomous Region in Muslim Mindanao.

IPAs give away fiscal and nonfiscal incentives to investors, which the Duterte administration wanted to rationalize under the proposed second tax reform package or Tax Reform for Attracting Better and High-quality Opportunities Act.

When these foreign investment pledges materialize, they are then counted as foreign direct investment.

The second quarter showed a different story from the 37.9-percent year-on-year drop to P14.2 billion during the first quarter, which also reported the lowest commitments since 2010.

In total, foreign investment pledges from January to June totaled P45.2 billion, a tenth more than the P41 billion during the first half of last year.

The PSA said the top three sources of investment commitments from April to June came from Indonesia (P6.4 billion), Japan (P5.1 billion) and the United States (P4 billion).

In terms of industries, the biggest future recipients of foreign investment inflows are manufacturing (P12.8 billion), construction (P7.1 billion) and administrative and support service activities (P5.4 billion).

The National Capital Region will host P12.9 billion worth of the approved foreign-led projects; Calabarzon, P8 billion; and Central Luzon, P4.3 billion.

PSA data showed foreign investors’ pledges declined year-on-year for six of the first eight quarters of the Duterte administration, with only the second quarter of this year and the third quarter of 2017 bucking the trend.

However, total commitments, which included those by Filipino investors, declined 50.2 percent in the second quarter to P114.7 billion from P230.4 billion a year ago.

Of the total second-quarter investment pledges, Filipino-led projects cornered the bulk at 73 percent, equivalent to P83.7 billion.

The PSA said total second-quarter investment approvals would create 44,526 jobs, about 53.2-percent lower than the 95,131 jobs expected to be generated from approvals during the same period last year.