By means of Lourdes O. Pilar, Researcher
APPROVED foreign investment commitments rose sharply in the second quarter, driven by improved investor fraudFThis is evident from preliminary data from the Philippine Statistical Authority (PSA).
Foreign investment commitments rose by 220.7% year-on-year to EUR 189.5 billion in the April to June period, a turnaround from the revised 64% contraction in the April to June period. Ffirst quarter.
It was the fastest year-over-year increase since the 4,445.6% increase in the US economy Ffirst quarter of 2023.
The amount of foreign investment commitments in the second quarter was the largest since the P394.46 billion approved in the fourth quarter of 2023.
“The quarter-on-quarter expansion of the Philippine economy was apparently taken as an indication of market growth, at least in the short and medium term, prompting an increase in investment commitments and approved investments,” said University of Asia and the Pacific Senior Economist Cid. L. Terosa said in an email interview.
The Philippine economy grew at an annualized rate of 6.3% in the second quarter, faster than the revised 5.8% in the second quarter. Ffirst quarter and 4.3% in the period April to June 2023.
In the second quarter, Switzerland was the main source of foreign investment commitments with 172.04 billion euros. This accounted for 90.8% of the total.
The PSA collects investment commitments from the government’s six investment promotion agencies: Board of Investments (BoI), BoI-Bangsamoro Autonomous Region in Muslim Mindanao (BoI-BARMM), Clark Development Corp. (CDC), Philippine Economic Zone Authority (PEZA), Subic Bay Metropolitan Authority (SBMA) and Zamboanga City Special Economic Zone Authority (ZCSEZA).
The BoI approved P175.08 billion in foreign investment commitments, accounting for 92.4% of this quarter’s total.
PEZA came in second with P14.03 billion in foreign investment commitments, accounting for 7.4% of the total. This was followed by SBMA with P124.09 million, BoI-BARMM with P110.06 million, CDC with P107.81 million and ZCSEZA with P49.65 million.
The Negros Island Region accounted for almost half (45.6%) of foreign investment commitments at P86.46 billion. This was followed by Calabarzon and Central Visayas with P6.93 billion and P4.35 billion, respectively.
Meanwhile, investment commitments from Philippine nationals rose 103.6% annually to P525.51 billion in the second quarter. It accounted for 73.5% of the combined pledges worth P715.01 billion.
Foreign and local investments committed in the second quarter are expected to create 26,915 jobs once the projects are completed.
The electricity, gas, steam and air conditioning sectors received the largest number of approved commitments: €172.74 billion or 91.2% of the total. This was followed by manufacturing with P12.39 billion and administrative and support services activities with P2.84 billion.
“Promises are promises. Until we see the approved and actual investment happening, we will have to wait and see. This will not rain on the parade of major investment promises so far, especially in this area [second quarter]. But reality has yet to come and be approved, and actual investment is still best,” said Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., in an email interview.
Mr. Asuncion said the increased investment commitments are a direct result of President Ferdinand R. Marcos Jr.’s foreign trips, where he promoted the country as an investment destination.
“Hopefully this increase in investment commitments will continue,” he said.
Mr Terosa said the weaker peso in the second quarter made investments in certain sectors in the Philippines more attractive.
For the rest of the year, he said a possible recession in some developed countries, continued weakness of the Chinese economy and geopolitical tensions could affect investment flows in developing countries such as the Philippines.
“I expect that investments in the second half of the year will be held back by these conditions,” Mr Terosa said.
Foreign investment commitments, which may materialize in the future, differ from actual foreign direct investment data maintained by the Bangko Sentral ng Pilipinas (BSP). Besides the projects, the BSP’s oversight also includes other matters such as reinvested profits and loans to Philippine units through their debt instruments.