Investment pledges from foreign sources more than doubled in the second quarter from a year ago amid the further easing of pandemic-induced restrictions and approval of reforms that seek to make it easier for foreign investors to enter the country.
Data from the Philippine Statistics Authority released yesterday showed total foreign investments approved by investment promotion agencies (IPAs) jumped 105 percent to P46.23 billion from April to June.
These investments were pledges filed with the Board of Investments, BOI-Bangsamoro Autonomous Region in Muslim Mindanao, Clark Development Corp., Philippine Economic Zone Authority (PEZA) and Subic Bay Metropolitan Authority (SBMA).
Among the different IPAs, the bulk or 71.34 percent of the foreign investments in the second quarter amounting to P32.98 billion were approved by SBMA, followed by PEZA with a 20.17 percent share or P9.32 billion.
In terms of country source, the Netherlands topped the list of foreign investments in the second quarter with a 41.2 percent share amounting to P19.04 billion, followed by Singapore which pledged P15.89 billion and Japan with P6.51 billion.
A large part or 41.7 percent of the total approved foreign investments in the second quarter amounting to P19.3 billion were pledged for real estate activities.
Transportation and storage came in second with foreign investment commitments amounting to P14.52 billion or 31.4 percent share, while manufacturing placed third with P6.15 billion or a 13.3 percent contribution.
By region, the biggest chunk of the approved foreign investments in the second quarter was intended for 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 worth of pledges or an 8.5 percent share, and CALABARZON with P3.7 billion or an eight percent share.
The foreign investment pledges for the second quarter are expected to generate 12,626 jobs.
For the first semester, total foreign investment pledges reached P55.21 billion, 30.67 percent higher than last year’s P42.25 billion.
Meanwhile, approved investments from Filipino investors reached P53.38 billion in the second quarter, down 14.38 percent from P62.35 billion a year ago.
Total approved investments from both foreign and Filipino investors reached P99.61 billion, up 17.4 percent from P84.85 billion the previous year. These projects are projected to create 19,094 jobs.
Commenting on the latest data, Rizal Commercial Banking Corp. chief economist Michael Ricafort attributed the sharp increase in foreign investments in the second quarter this year to the easing of the alert level in Metro Manila and other areas to the lowest alert level 1, as well as increased borrowings or loans to finance more investments, which helped investors firm up plans for new and expansion projects.
He said the passage of reforms such as the Corporate Recovery and Tax Incentives for Enterprises Act, which reduced the corporate income tax rate and provided greater certainty on investments, also helped drive higher foreign investments.
Other reform measures passed to ease foreign ownership limits include the amendments to the Public Service Act, Foreign Investments Act, and Retail Trade Liberalization Act.
“Thus, all these factors would have helped improve and could still lead to further pick up in foreign investments, going forward, especially after the May 2022 elections, with greater certainty on the new administration especially in terms of economic policies and reforms,” Ricafort said.
He said the country’s possible membership into the Regional Comprehensive Economic Partnership, which is the world’s biggest free trade agreement, as well as into the US-led Indo-Pacific Economic Framework for Prosperity would boost foreign investments in the Philippines.
“Attracting or encouraging more foreign investments/FDIs (foreign direct investments) into the country is a pillar in the country’s economic recovery program since they create more jobs or employment and other business or economic activities in the country,” he said.
Socioeconomic Planning Secretary Arsenio Balisacan earlier said the President had ordered the Cabinet to aggressively pursue new trade opportunities, properly implement recently amended liberalization laws and fully utilize public private partnerships to create more jobs.