Foreign investment pledges plummet in Q1

MANILA, Philippines — Investment pledges from foreign firms approved by investment promotion agencies (IPAs) plunged by nearly 64 percent from January to March compared to last year’s level amid a stubbornly high inflation and steep borrowing costs.

Data released by the Philippine Statistics Authority (PSA) yesterday showed total foreign investments cleared by IPAs in the first quarter amounted to just P148.43 billion, 63.6 percent lower than the P408.22 billion in the same period last year.

These investments were pledges registered with the Board of Investments (BOI), Clark Development Corp., Cagayan Economic Zone Authority, Philippine Economic Zone Authority and Subic Bay Metropolitan Authority.

The PSA also said there were no foreign investment approvals reported in the first quarter from the following IPAs: the Authority of the Freeport Area of Bataan, Bases Conversion and Development Authority, BOI-Bangsamoro Autonomous Region in Muslim Mindanao, Clark International Airport Corp., John Hay Management Corp., Poro Point Management Corp., Tourism Infrastructure and Enterprise Zone Authority and Zamboanga City Special Economic Zone Authority.

Oikonomia Advisory and Research Inc. president and chief economist John Paolo Rivera said the decline in foreign investments may be due to less volume of investment proposals coming in due to a variety of factors, including economic headwinds such as inflationary pressures and steep cost of borrowing in the Philippines.

He also attributed the drop in foreign investments to fewer quality investment proposals being channeled to the economy.

The PSA said Singapore was the biggest source of foreign investment commitments in the first quarter with P70.06 billion or 47.2 percent.

The Netherlands came second with P38.89 billion (26.2 percent), followed by South Korea with P20.23 billion (13.6 percent).

In terms of sectors, electricity, gas, steam and air conditioning supply received the largest amount of approved foreign investments at P109.19 billion or 73.6 percent of the total in the first quarter.

Accommodation and food service activities ranked second with P20.09 billion (13.5 percent), while manufacturing placed third with P12.62 billion (8.5 percent).

By location, Calabarzon (Cavite-Laguna-Batangas-Rizal-Quezon) accounted for the bulk of the foreign investment pledges with P117.39 billion or 79.1 percent of the total in the first quarter.

Central Luzon had the second largest share with P23.83 billion (16.1 percent), followed by the Bicol Region with P2.86 billion (1.9 percent).

Total approved investments from foreign and local sources amounted to P309.45 billion in the first quarter, down by 36 percent from P480.48 billion in the same period last year.

These investments are expected to generate a total of 27,711 jobs in the first quarter, 8.8 percent higher than the 25,470 projected employment in the same quarter of the previous year.

Of the total expected employment, 23,378 jobs would be absorbed by foreign investment projects.