Foreign investment pledges jumped by over threefold in the fourth quarter of 2018 due to a deluge in commitments from Chinese investors, bringing total approvals of foreign-led projects to P178.9 billion last year.
PSA data released Thursday showed foreign pledges approved by the country’s seven investment promotion agencies (IPAs) in 2018 exceeded by 69.3 percent the P105.7 billion generated in 2017, which was the lowest since 2005’s P95.8 billion.
“The Philippines has been touted in international media among the top investment destinations, given strong fundamentals and growth, decisive leadership, the ‘Build, Build, Build’ program and many reforms in place. Some firms are shifting from China, the US and the UK,” Socioeconomic Planning Secretary Ernesto M. Pernia said in a text message to the Inquirer.
“It also shows that the incentives rationalization [under the Trabaho bill] is not a turn-off” to potential investors, added Pernia, who heads the state planning agency National Economic and Development Authority (Neda).
The PSA report reflected approvals made by the Authority of the Freeport Area of Bataan (Afab), the Board of Investments (BOI), the BOI-Autonomous Region in Muslim Mindanao (ARMM), the Cagayan Economic Zone Authority (Ceza), the Clark Development Corp. (CDC), the Philippine Economic Zone Authority (Peza), and the Subic Bay Metropolitan Authority (SBMA).
IPAs give away fiscal and nonfiscal incentives to investors, which the Duterte administration wanted to rationalize or remove under the proposed second tax package or the Tax Reform for Attracting Better and High-quality Opportunities (Trabaho) Act pending in Congress.
The Trabaho bill also aimed at slashing the corporate income tax rate from 30 percent, the highest in Asean, to 20 percent.
When these foreign investment commitments materialize, they will be counted as foreign direct investment (FDI).
During the fourth quarter alone, approved foreign-led projects climbed 322 percent to P91.2 billion from P21.6 billion a year ago, making it three straight quarters of year-on-year increases.
The top three sources of pledges during the October to November period were China (P48 billion), Singapore (P15.3 billion), and Japan (P4.8 billion).
PSA data showed that for the entire 2018, China was the top source of commitments with P50.7 billion, followed by Singapore with P21.2 billion and Japan, P19.7 billion.
Approved Chinese-led investments climbed 2,073 percent from just P2.3 billion in 2017.
The growth in Chinese investment commitments last year was dwarfed only by those from Malaysia (up 2,998 percent to P14.7 billion) and France (up 2,487 percent to P2.6 billion).
To recall, China President Xi Jinping visited President Duterte in Manila in November last year, promising financing for big-ticket infrastructure projects under the government’s ambitious “Build, Build, Build” program as well as bringing along interested Chinese investors to the Philippines.