Based on the article published in the June 8-9, 2018 issue of Business World, approved foreign investment pledges fell to their lowest level in nearly eight years in the last quarter of 2018. FDIs committed with Investment Promotion Agencies (IPA) dropped 37.9% to P14.2 billion for the first three months of 2018 from P22.883 billion posted in the same period in 2017 according to Philippine Statistics Authority (PSA) data.
In the first quarter of 2018, the Philippine Economic Zone Authority (PEZA) contributed the most in pledged FDIs at 91.2% with P12.96 billon. It is followed by Board of Investments (BoI) with a 5.6% share at P792.8 million, Clark Development Corp. (CDC) with 2.4% at P339.8 million (a 59.8% decline), Cagayan Economic Zone Authority (CEZA) with 0.7% at P104.1 million (up 92.4%), and Subic Bay Metropolitan Authority (SBMA) with 0.1% at P11.5 million (down 96.3%). Two IPAs, Authority of the Freeport Area of Bataan (AFAB) and Board of Investments – Autonomous Region of Muslim Mindanao (BoI-ARMM), have no FDIs for the first quarter of 2018.
According to this article the following could have contributed the decline in FDIs: the impact of the Tax Reform for Acceleration and Inclusion (TRAIN) Law and external developments; the effect of domestic inflation that exceeded the central bank’s target; greater foreign investor uncertainty arising from heightened market volatility; trade war concerns and geopolitical tensions; and the rising production costs domestically as Philippine inflation was rising sharply and the peso depreciation being strong versus most other Asian currencies.
However, it is also said that, foreign investment commitments are different from actual capital flows as tracked by the Bangko Sentral ng Pilipinas for balance of payments purposes. Latest BSP data showed that net foreign direct investments grew 56.1% to P76.1 billion in the first two months of the year as compared to P48.7 billion for the same period last year.
In comparison with PSA data gathered from 2012 to 2017, PEZA is consistently the highest among the seven promotion agencies in terms of FDIs with a total value of P852.9 billion which is 64.6% of the total FDIs from 2012-2017. In the first quarter of 2018 CALABARZON, which has 35 out of the 74 manufacturing economic zones of PEZA , got the 91.2% or P12.96 billion in investment pledges. The Manufacturing industry is also consistent in terms of having the highest share of FDIs with 48.6% of the total for the period 2012-2017 while in the first quarter of 2018 it comprises 64.1% of the country’s FDIs. Netherlands and Japan continue to be top foreign investors in the country. From the 2012-2017 PSA data, the country’s top foreign investors are Netherlands (P304.1 billion), Japan (P263.2 billion), and USA (P174.7 billion). In the first quarter of 2018 Japan was the country’s biggest foreign investor (P7.9 billion), followed by United Kingdom (P1.5 billion) and Netherlands (P878.5 million). (Source: Philippine Statistics Authority and Business World)