PSA: Committed FDIs soared to record-high P889.07B in 2023

MANILA, Philippines  — Committed foreign direct investments (FDI) in the country soared to a record-high in 2023, reflecting the results of the Marcos administration’s efforts to sell the Philippines as an investment destination and after state statisticians included more economic zones in its quarterly tracking of pledges.

The government approved FDI pledges worth P889.07 billion last year, 3.7 times larger than the amount recorded in 2022, the Philippine Statistics Authority (PSA) reported on Thursday.

The figure represents FDIs committed to the country’s ecozones, which entice investors with tax perks. These pledges may not translate to actual inflows in the future, but they are nonetheless a closely watched indicator of investor sentiment.

The PSA’s data is different from the Bangko Sentral ng Pilipinas’ (BSP) own tracking of FDI inflows, which is on a net basis.

Figures showed the investment commitments in 2023 were the largest tally in the PSA’s dataset that goes back to 1996.

Caveats

But there are caveats to that milestone. To note, the statistics agency only started tracking the pledges in Bases Conversion and Development Authority, Clark International Airport Corp., John Hay Management Corp. and Zamboanga City Special Economic Zone Authority last year.

But beyond the expanded scope of the data, Ruben Carlo Asuncion, chief economist at Union Bank of the Philippines, said the higher pledges also reflected the commitments made by foreign businesses to President Marcos during his trips abroad.

“Although it has been quite a difficult investing environment, this increase in pledges shows the attractiveness of the Philippines as an investment destination due to its skilled, available and young population,” Asuncion said.

“We may see more pledges to come particularly when the cost of borrowing worldwide becomes cheaper as global interest rates start to ease in the second half of 2024,” he added.

In the fourth quarter, the government approved P394.45 billion in FDI commitments, more than double the amount a year ago. If these promises materialize, a total of 28,529 jobs are expected to be generated.

The Netherlands posted the highest investment commitment last quarter amounting to P345.76 billion, or 87.7 percent of the total. By sector, the electricity, gas, steam and air conditioning supply industry received the largest amount of approved investments at P335.87 billion. —Ian Nicolas P. Cigaral