By means of Abigail Marie P. Yraola” Deputy research head
The approved foreign investments in the Philippines fell by 38.9% last year to P543.62 billion, the steepest decrease in four years, the Philippine Statistics Authority reported Thursday.
Preliminary data from the PSA showed the value of foreign obligations approved by the investment agencies of the country (IPAs) in 2024 lower than the P889.24 billion in 2023.
The annual decrease in foreign investments was the lowest since the fall of 71.3% included in 2020.
In the three months to December, the commitments reached P57.70 billion, with 85.4% decrease in P394.46 billion in the same period in 2023.
This was the steepest decrease in more than 26 years or since the 94.5% slump in the third quarter of 1998. With value it was the lowest since the P27.46 billion in the third quarter of 2023.
“Worldwide uncertainty due to geopolitical tensions is the main reason for the great decrease in foreign investments for the quarter,” said economist Reinielle Matt Eece, in an e-mail.
He added that the campaign of US President Donald J. Trump and the final victory in addition to his policy that includes tariff increases, strict immigration regulations and other trading reforms, hesitators hesitated to invest outside their home country.
“Foreign investors hesitate when they hold their capital, re-analyze the global risk factors and are on a” waiting and seen “mode about the constant developments of the global economy,” said Mr. Eece.
Moreover, he said that the newest approved data from foreign investments influenced the growing process of the country and although unemployment remains relatively low and stable, economic sentiment is negatively influenced by growth print that will continue this year.
“Investors will now worry about a slow growth of consumption and adding global uncertainty to the mix, they will hesitate to invest in the country,” he said.
The Filipino economy expanded by 5.2% in the fourth quarter of 2024, the slowest pace in six quarters or since 4.3% in the second quarter of 2023.
This brought the gross domestic product (GDP) of the country at 5.6% in 2024, under the revised 6-6.5% government goal.
On the other hand, unemployment in the country delayed to 3.1% in December, which brought the entire annual average to a low of 3.8%. This corresponds to 1.94 million unemployed Filipinos.
The December figure was the lowest since April 2005, when the Statistics Agency has revised its definition of the unemployed to Filipinos of 15 years and older without a job, available for work and were actively looking there.
For the fourth quarter, investment obligations were approved by five IPAs-Board of Investments (BOI), Boi-Bangamoro Autonomous Region in Muslim Mindanao (BOI-BARMM), Clark Development Corp. (CDC), Philippine Economic Zone Authority (PEZA), and Subic Bay Metropolitan Authority (SBMA).
Switzerland was the best source of investment issues for 2024 after committing P289.06 billion, or 53.2% of the total. It was followed by the P100.34 billion from South Korea (share of 18.5%) and the P50.22 billion in the Netherlands (share of 9.2%).
In the meantime, South Korea had the largest approved investments with P26.16 billion in the fourth quarter, accounting 45.3% of the total P57.70 billion commitments. This was followed by the Netherlands at P9.19 billion (share of 15.9%) and Japan with obligations worth P4.11 billion (7.1% share)
The BOI contributed the largest bulk with 70.7% of foreign investment books worth P384.44 billion last year.
In the last three months of 2024, Boi had the largest obligations that were worth P28.10 billion, followed by PEZA with P15.44 billion.
SBMA and CDC approved P13.64 billion and P445.10 million in commitments respectively. Boi-Barmm approved P86.66 million in obligations.
Duration the Period, the Authority of the Freeport Area of Bataan, Bases Conversion and Development Authority, Cagayan Economic Zone Authority, Clark International Airport Corp., Poro Point Management Corp., John Hay Management Corporation, Tourism Infrastructure and Enterprise and Enterprise, and Enterprise, And Zamboanga City Special Economic Zone Authority did not approve any investment instructions during the period.
In 2024, around 62.8% or P341.50 billion of the total approved foreign investments will go to the energy sector.
Meanwhile, in the period from October to December, the production sector has cornered the largest approved foreign investments with P30.55 billion, around 52.9% of the total commitments during the period.
In addition, approximately 20.6% or P11.87 billion of the approved foreign investments will go into the transport and storage industry, while 13.3% or P7.68 billion in promises in the energy industry will be invested.
During the period, 34.5% of these foreign investments will be worth P19.92 billion for projects in Central Luzon.
In the meantime, Calabarzon (Cavite, Laguna, Batangas, Rizal and Quezon) has in line with P13.51 WOTH of investment obligations, while Metro manila gets P12.86 billion.
In 2024, Calabarzon was cornered around P195.67 billion in these investment issues.
If these foreign obligations arise, these projects are expected to generate 39,284 jobs, 20.3% higher than the 23,726 projected jobs a year earlier.
Mr. Erece said that in terms of generating jobs it is still too early to predict a delay, but it is important for policymakers to take steps to prevent this delay and to attract more investments to the job growth to encourage and accelerate economic expansion.
“Part of the measures that policymakers can take is the implementation of a more accommodating monetary policy, such as a timely rate reduction,” said Mr. Erece.
Although this can ultimately ensure that the Filipino peso is mainly written off against the US dollar, he added that the “economy is much more dependent on domestic consumption and expenditure, so making a tariff reduction will improve market sentiment and expenditure of expenditure and expenditure Both companies and consumers in the country. “
During the first policy meeting last Thursday, the Bangko Sentral NG Pilipinas (BSP) decided to keep the rates stable at 5.75%.
The central bank trimmed a total of 75 basic points last year.
In the fourth quarter, the total investment obligations of foreign and Filipino nationals fell by 36.1% to P373.70 billion, lower than P585.17 billion in the same period in 2023. Investment spending by Filippinos achieved P316 billion in the last quarter, good for the Accounting 84.6% of the total.
Mr. Erece sees rising tensions on global trade, and a break in speed reductions by the BSP, due to the slow growth expected in 2025 and “this quarter cannot be optimistic for a growth of investments.”
However, he said that an economy that is largely powered by domestic consumers and companies offers a significant advantage in this uncertain global landscape.
“Stimulating consumption through tax expenditure and the accommodating monetary policy can improve business sentiment, which invites more foreign investments in the country,” he said.
The PSA data about foreign investment obligations, which can soon materialize, differ from the actual direct foreign investments that are followed by the BSP. The monitoring of the central bank goes beyond the projects and includes other articles, such as reinvestment and borrowing to Filipino units through their debt instruments.