Foreign investment pledges decline 64%

In second quarter

MANILA, Philippines — Investment pledges from foreign firms fell by 64 percent in the second quarter from a year ago as US reciprocal tariffs and geopolitical tensions weighed on investor sentiment.

Philippine Statistics Authority (PSA) data released yesterday showed that total foreign investments registered with investment promotion agencies (IPA) declined sharply to P67.38 billion in the second quarter from P189.50 billion in the same period last year.

The foreign investment commitments in the second quarter were approved by the following IPAs: the Authority of the Freeport Area of Bataan, Board of Investments, Bangsamoro Board of Investments, Clark Development Corp., Clark International Airport Corp., Philippine Economic Zone Authority and Subic Bay Metropolitan Authority.

Oikonomia Advisory and Research Inc. economist Reinielle Matt Erece said in an email that the significant decline in investments may be due to the pessimistic investor sentiment in the world today amid trade tensions especially over US President Donald Trump’s reciprocal tariffs, as well as geopolitical conflicts in the Middle East.

Erece said these events may slow down economic growth globally as input costs may continue to pick up while economic activity weakens.

“This makes investors wary of any significant moves as they are concerned with potentially slower returns from their investments relative to much more stable years in the past,” he said.

PSA data showed that Singapore was the top source of foreign investment pledges, with P53.48 billion or 79 percent of the total in the second quarter.

The US ranked second with P3.96 billion (5.9 percent), followed by the Netherlands with P1.91 billion (2.8 percent).

In terms of sectors, the electricity, gas, steam and air conditioning supply industry attracted the largest share of foreign investments, amounting to P54.75 billion or 81 percent of the total in the second quarter.

This was followed by administrative and support service activities with P4.61 billion or 6.8 percent share, and manufacturing industry with P4.46 billion or 6.6 percent share.

The Bicol Region received the largest share of foreign investment pledges worth P32.21 billion or 47.8 percent of the total in the second quarter.

Calabarzon (Cavite-Laguna-Batangas-Rizal-Quezon) placed second with P21.39 billion (31.7 percent), followed by Central Luzon with P4.05 billion (six percent).

Investments from both foreign and Filipino nationals approved by IPAs in the second quarter dropped by 59 percent to P299.08 billion from P720.10 billion in the same quarter of 2024.

Of the total, 78 percent or P231.69 billion came from Filipino firms.

Approved investments from both foreign and Filipino sources for the second quarter are expected to create 38,234 jobs, up by 42 percent from the projected employment of 26,981 in the same period last year.

“In the short term, improving investor sentiment may be hard to achieve,” Erece said.

He said the country, however, may continue to attract investments by having a resilient domestic economy through improving price stability and business environment, as well as upskilling the labor force.

“Further support for exporting industries may also be helpful in becoming more competitive in international markets,” he said.