FOREIGN INVESTMENTS Foreign investment commitments received by the Philippine Investment Promotion Agencies (IPA) rose sharply in the third quarter, driven by investments from South Korea and Switzerland, the statistics agency said.
Preliminary data from the Philippine Statistics Authority (PSA) shows that the value of foreign commitments approved by IPAs rose 434.4% year-on-year to P146.75 billion from July to September from P27.46 billion in the third quarter of 2023. .
Despite the strong annual growth, the amount was the lowest in investment commitments since the third quarter of 2023.
On a quarter-on-quarter basis, growth also declined 22.56% from P189.5 billion in the second quarter.
South Korea was the top source of foreign investment commitments in the third quarter with P53.72 billion (36.6%), followed by Switzerland with P51.84 billion (35.3%). Japan’s investment commitments amounted to P15.96 billion (10.9%).
The PSA compiles investment commitments approved by the government’s six IPAs: Board of Investments (BoI), BoI-Bangsamoro Autonomous Region in Muslim Mindanao (BoI-BARMM), Clark Development Corp. (CDC), Cagayan Economic Zone Authority (CEZA), Philippine Economic Zone Authority (PEZA) and Subic Bay Metropolitan Authority (SBMA).
The BoI approved P70.34 billion in foreign investment commitments, accounting for 47.93% of this quarter’s total.
PEZA approved P58.38 billion in foreign investment commitments, accounting for 39.78% of the total. This was followed by CDC with P14.66 billion, BoI-BARMM with P86.7 million, SBMA with P53 million and CEZA with P3.24 million.
The Calabarzon region accounted for 40.1% of the committed foreign investments with P58.86 billion. This was followed by Bicol Region with P51.84 billion and Central Luzon with P15.2 billion.
The manufacturing industry received almost half of the approved commitments with P70.57 billion, followed by the electricity, gas, steam and air conditioning supply industries with P51.92 billion and real estate activities with P13.13 billion.
Foundation for Economic Freedom President Calixto V. Chikiamco said in a Viber message that the growth in foreign investment commitments can be attributed to the liberalization of investment laws, such as the changes to the Public Service Act.
“In addition to lowering the cost of doing business with better infrastructure and less red tape, the government can further encourage foreign investment by further liberalizing our restrictive anti-FDI laws, especially the Constitution,” he said.
Cristina S. Ulang, head of research at First Metro Investment Corp., said the higher investment commitments reFread President Ferdinand R. Marcos Jr.’s “tireless global investment promotion.” for the country.
The Ministry of Trade and Industry reported in June that a total of $19 billion in investments pledged during Mr. Marcos’ foreign trips had been realized or implemented.
She also noted that the recently signed Law on Business Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) could help attract foreign investment.
CREATE MORE expands incentives and reduces corporate taxes for companies registered with IPAs.
“Very sustainable given the more competitive tax incentives and greater emphasis on ease of doing business in the country,” Ms Ulang said in a Viber message to Business world.
Mr Chikiamco said he expects more investment from South Korea once the Free Trade Agreement (FTA) comes into effect.
The Senate in September ratiFHe signed the Free Trade Agreement between the Philippines and South Korea, which will eliminate Philippine tariffs on 96.5% of goods from South Korea, while Seoul will lift tariffs on about 94.8% of Philippine products.
However, the FTA is still undergoing the ratification process at the Korean National Assembly.
Mr Chikiamco said the government should sign more free trade agreements with the European Union, Canada and the United Arab Emirates.
“Despite any negative geopolitical event, this momentum of increased foreign investment is likely to continue,” he added.
PSA data also showed that investment commitments from foreign and Philippine nationals rose 542% to P541.29 billion in the third quarter. Of this, Philippine nationals have pledged P394.54 billion in investments.
PSA data on foreign investment commitments, which may materialize in the near future, differs from the actual foreign direct investment tracked by the Bangko Sentral ng Pilipinas for the balance of payments. The central bank’s supervision goes beyond projects to include other issues such as reinvested profits and loans to Philippine units through their debt instruments. — Aubrey Rose A. Inosante