Foreign investment pledges breach record at P390.1B in 2019

Commitments of foreign investors to set up shop in the Philippines climbed to a record-high P390.1 billion last year, the Philippine Statistics Authority (PSA) reported Thursday.

The latest PSA data showed that the 2019 haul was not only more than double the P183.3-billion worth in 2018 but also the highest yearly amount of foreign-led projects approved by investment promotion agencies (IPAs) since available data in 1996.

The previous largest annual foreign investment pledges were registered in 2012, amounting P289.5 billion.

The PSA report covered approvals made by the following IPAs: Authority of the Freeport Area of Bataan (Afab), the Board of Investments, the BOI-Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), 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 non-fiscal incentives to investors, which the Duterte administration wanted to rationalize under the proposed second tax package or the Corporate Income Tax and Incentives Reform Act (Citira) pending in the Senate.

The Citira bill was also aimed at gradually reducing the corporate income tax rate from 30 percent at present—the highest in Asean, to 20 percent over a 10-year period.

When these foreign investment commitments materialize, they will be counted as foreign direct investment (FDI).

PSA data showed that foreign investment pledges dropped in four IPAs last year: Afab, P340.2 million from P1.7 billion in 2018; CDC, P1.3 billion (from P7.1 billion); Ceza, P340.1 million (from P1.2 billion); and Peza, P49.3 billion (from P68.3 billion).

However, the big gains in following three IPAs offset the decline experienced by the others: foreign investment commitments before BOI climbed to P335.7 billion in 2019 from P103.9 billion in 2018; in BOI-BARMM, rose to P306.8 million last year from P235.1 million during the previous year; and in SBMA, climbed to P2.9 billion from P803.9 million.

The top source of IPAs’ foreign investment pledges last year was Singapore with P176.3 billion, up 732.6 percent from 2018’s only P21.2 billion.

Last year, Trade Undersecretary Ceferino S. Rodolfo told the Inquirer that the BOI approved during the third quarter of 2019 Phil Fiber Optic Cable Network Ltd. Inc.’s upcoming P134-billion investment.

Rodolfo, who is also the BOI’s Managing Head, had said the Singaporean firm will install 60,000 kilometers of fiber-optic cables nationwide.

China, which was the biggest source of IPA approvals two years ago, slid to second place with P88.7 billion in proposed projects in 2019, but still up by 74.9 percent from P50.7 billion in 2018.

The third largest potential investor-country was South Korea, with P41.5 billion in projects approved last year or up 2,101 percent from only P1.9 billion two years ago.

When last year’s foreign investment pledges were combined with commitments from Filipino-owned companies, total IPA approvals reached P1.3 trillion, 20.7-percent higher than 2018’s P1.1 trillion.

Filipino-led projects that applied for tax perks in 2019 amounted P918.9 billion, inching up 2 percent from P900.8 billion in 2018.

Edited by TSB