Approved foreign investment pledges lowest in more than a decade — PSA IN USA
By Jochebed B. Gonzales
Senior Researcher
Senior Researcher
APPROVED foreign investment commitments fell to their worst level in 12 years, according to data the Philippine Statistics Authority (PSA) released on Thursday.
The PSA said approved foreign investment pledges for the entire 2017 totaled P105.6 billion, down by an annual 51.8%. This was the lowest amount since 2005’s P95.8 billion.
The tally for the fourth quarter was likewise lackluster, plunging 82.8% to P21.6 billion from P125.7 billion in 2016’s comparable three months.
“The drop in foreign investment pledges in 2017 may be attributed to the high base/denominator effects in previous years,” said Michael L. Ricafort, economist at Rizal Commercial Banking Corp.
He likewise cited “tentativeness on investment” in the face of the five-month siege of Marawi City up to October last year and US President Donald Trump’s “America First” policy that encouraged US businesses to invest more at home than abroad in order to create jobs.
The United States’ approved investment pledges of P8.7 billion in 2017 was merely 8.3% of the total for the year and was 72.2% less than the P31.4 billion in 2016.
For Ruben Carlo O. Asuncion, chief economist at the Union Bank of the Philippines, “the way the government was dealing with different countries may have an impact on foreign investments.”
Approved commitments from the Netherlands and Australia, which were the top two sources of foreign investment pledges in 2016, showed the biggest drops last year. Investment pledges from the Netherlands dropped 80.5% to P9.6 billion last year from P49.4 billion in 2016. Australia, meanwhile, saw pledges drop 87.9% to P3.9 billion in 2017 from P32.4 billion a year prior.
The country’s largest foreign investor in 2017 was Japan, whose approved FIs registered P32 billion, an 18.2% increase from 2016. Japanese investments accounted for 30.3% of total pledges, followed by Taiwan (10.3%) and Singapore (9.6%).
Pledges from China and Hong Kong increased by 53.6% (P2.3 billion) and 16.4% (P1.6 billion), respectively.
The report counted investment pledges from the government’s seven premier investment promotion agencies (IPAs), namely: the free port authorities of Bataan, Clark, Cagayan, Subic and the Autonomous Region of Muslim Mindanao, as well as the Board of Investments and the Philippine Economic Zone Authority (PEZA).
PEZA, which contributed 74% of the total last year, reported a 35.4% drop in approved foreign investment pledges at P78.3 billion versus the year-ago P121.2 billion.
Foreign investment commitments are different from actual capital inflows tracked by the Bangko Sentral ng Pilipinas (BSP) for balance of payments purposes. Latest available BSP data showed net foreign direct investments rising by 20% annually to $8.725 billion in the 11 months to November, surpassing the BSP’s $8-billion full-year forecast.
In the fourth quarter alone, manufacturing continued to receive the biggest portion of approved foreign investment pledges with P8.3 billion, accounting for 38.4%.
This was followed by real estate with investment commitments worth P5.1 billion or 23.5%, as well administrative and support service activities at P3.5 billion or 16%.
The bulk of the approved commitments in the fourth quarter — 29.5% at P6.4 billion — will go to projects in the Cavite-Laguna-Batangas-Rizal-Quezon (Calabarzon) region immediately south of Metro Manila, or the National Capital Region (NCR), that hosts major industrial parks. Calabarzon was followed by NCR’s P5.5 billion or 25.4% and Central Luzon with 22.6% or P4.9 billion.
According to PSA, around 29,813 jobs will be generated from the total projects approved by the seven IPAs for the fourth quarter of 2017.
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