Foreign investment pledges doubled in Q2, PSA report shows

Upcoming foreign-led investments in the Philippines that sought tax perks from the government rose 105 percent year-on-year to P46.23 billion in the second quarter, the Philippine Statistics Authority (PSA) reported Tuesday.

The PSA’s latest report showed that foreign investment approvals by government investment promotion agencies (IPAs)  from April to June  were more than double the P22.5 billion approved a year ago.

The IPAs included the Board of Investments (BOI), BOI-Bangsamoro Autonomous Region in Muslim Mindanao (BOI-BARMM), Clark Development Corp. (CDC), Philippine Economic Zone Authority (Peza), Poro Point Management Corp. (PPMC), Subic Bay Metropolitan Authority (SBMA), and Tourism Infrastructure Economic Zone Authority (Tieza).

The PSA report included data from PPMC and Tieza for the first time, including prior years’ approvals, although both IPAs were unable to attract new foreign investors during the second quarter of both 2021 and 2022.

More than two-fifths of the second-quarter foreign investment pledges to IPAs came from the Netherlands (P19.04-billion worth), while more than a third were from Singaporean firms (P15.89 billion). Investors from Japan pledged P6.51 billion in the same three-month period.

In terms of sectors, real estate activities cornered the bulk of the investment pledges at P19.3 billion, followed by transportation and storage (P14.52 billion) and manufacturing (P6.15 billion).

“The biggest chunk of the approved foreign investment in the second quarter of 2022 was intended to finance projects in Central Luzon amounting to P33.94 billion or 73.4 percent of the total.   This was followed by Central Visayas with P3.94 billion (8.5 percent) and Calabarzon with P3.7 billion (8 percent),” the PSA said in a statement.

From January to June, investments committed by foreigners totaled P55.21 billion, up 31 percent from P42.26 billion during the first six months of last year.

Homegrown companies accounted for the bulk of the new projects approved by the IPA for tax and other incentives in the second quarter, amounting to P53.38 billion  or 53.6 percent of the total approvals worth P99.61 billion.

The second quarter approvals were 17.4 percent higher than the P84.85 billion a year ago.

” The approved projects of foreign and Filipino investors in the second quarter of 2022 were projected to generate 19,094 employment. Out of the total anticipated employment for the period, approved projects with foreign interest were projected to generate 12,626 employment based on the reports of  the IPAs,” the PSA said.

The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act signed by former president Rodrigo Duterte last year empowered the President to grant hefty tax breaks to entice elephant-sized investments, upon the recommendation of the interagency Fiscal Incentives Review Board (FIRB).

The CREATE Law also rationalized the previously wide array of tax perks being offered by IPAs, which had resulted in billions of pesos in foregone revenue for the government.