Investment pledges down by 38% in Q1
Foreign investment approvals posted a sharp decline in the first quarter of 2018, the government reported on Thursday, with only one investment promotion agency (IPA) posting growth during the period.
Seven monitored IPAs approved just P14.2 billion in foreign pledges in the first three months of 2018, down 37.9 percent from P22.9 billion a year earlier, the Philippine Statistics Authority (PSA) said.
Just one of the seven IPAs posted year-on-year growth: the Cagayan Economic Zone Authority (CEZA).
Declines were recorded by the Board of Investments (BOI), Clark Development Corp., Philippine Economic Zone Authority and the Subic Bay Metropolitan Authority.
The Authority of the Freeport Area of Bataan and the BOI-Autonomous Region of Muslim Mindanao, meanwhile, had no approvals during the three-month period.
Commenting on the data, IHS Markit Asia Pacific chief economist Rajiv Biswas said the significant drop underscored the competition the Philippines was facing from other Asian developing countries, notably from other Association of Southeast Asian nations such as Indonesia and Vietnam.
“A key focus for government policy will need to be on improving the business climate for foreign investment, particularly since the Philippines dropped by nine places to 50th out of 63 nations in the IMD’s 2018 World Competitiveness Rankings,“ he said.
Biswas, however, said there were some positive highlights in the foreign investment approvals data, notably the strong foreign investment commitments from Japan.
“Another important positive was that around 64 percent of total foreign investment commitments in the first quarter were in manufacturing, which is a critical sector for the nation’s future economic development,” he added.
Japan was the top prospective investing country in the first quarter with P7.9 billion worth of commitments, representing 55.3 percent of total foreign pledges. The United States and the Netherlands followed with P1.5 billion (10.9 percent) and P878.5 million (6.2 percent), respectively.
Manufacturing took the largest share of pledges (P9.1 billion), followed by administrative and support services (P1.8 billion) and real estate (P1.81 billion).
In terms of location, Region IV-A (Cavite, Laguna, Batangas, Rizal and Quezon provinces or Calabarzon) accounted for P7.4 billion, followed by the National Capital Region at P3.2 billion and Region X (Northern Mindanao) at P1.6 billion.
Approved investments from both Filipinos and foreigners rose by 52.3 percent to P185 billion in three months to March, compared to P121.5 billion a year ago.
Filipinos continued to dominate the investments approved in the first quarter with P170.8 billion, or a 92.3 percent share, in pledges.
Projects of foreign and Filipino investors approved by the seven IPAs during the period are expected to generate 33,704 jobs.
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