A boat is seen on the Pasig River on July 31. – PHILIPPINE STAR/ MIGUEL DE GUZMAN
FOREIGN INVESTMENT commitments fell 22.4% in the third quarter as investors worried about a looming global economic slowdown, rising inflation and the ongoing war between Russia and Ukraine.
Data from the Philippines Statistics Administration (PSA) showed that total approved foreign investment fell to 13.05 billion pesos in July-September, from 16.82 billion pesos in the same period a year ago.
This was the smallest quarterly amount since P8.981 billion in investment commitments approved in the first quarter of this year.
In the first nine months of 2022, approved foreign investment pledges rose 15.6% to 68.28 billion pesos.
Japanese investment accounted for 34.5% or 4.5 billion pesos of the total approved foreign investment, followed by South Korea at 15.5% (2.02 billion pesos) and Singapore at 12.6% (1.64 billion pesos).
According to PSA, the investments were approved in the third quarter by four Investment Promotion Agencies (IPAs), namely the Board of Investments (BoI), Clark Development Corp. (CDC), the Philippine Economic Zone Authority (PEZA) and Subic Bay Metropolitan Authority (SBMA).
The PEZA accounted for 70.9% or 9.25 billion pesos of the total investment in the July-September period, followed by BoI at 16.5% or 2.16 billion pesos and the CDC at 10.5% or 1.36 billion pesos. The SBMA approved investments worth P276.13 million.
No foreign investment was approved by other IPAs such as Bataan Free Zone Authority (AFAB), BoI-Bangsamoro Autonomous Region in Muslim Mindanao (BoI-BARMM), Cagayan Economic Zone Authority (CEZA), Poro Point Management Corp. ( PPMC) and the Tourism Infrastructure Economic Zone Authority (TIEZA).
PSA data showed that manufacturing received the largest share of approved foreign investment at 55.2%, or 7.20 billion pesos. Administrative and supporting services activities accounted for 25.9% (P3.38 billion), while real estate activities accounted for 10.3% (P1.35 billion).
Half or P6.6 billion of the approved investments go to Calabarzon (Cavite, Laguna, Batangas, Rizal and Quezon), while Central Luzon 23% or P3.02 billion and the National Capital Region P2.24 billion receive 17.1%.
Once these projects are implemented, 17,994 jobs are expected to be created.
Approved investments by foreign and Filipino nationals rose 58% year-on-year to 159.18 billion pesos in the third quarter. Of the total, Philippine nationals accounted for P146.13 billion or 91.8%.
Sought for comment, Undersecretary of Commerce Ana Carolina P. Sanchez told BusinessWorld in a Viber message that the decline in approved foreign investment could be due to concerns about a global economic slowdown.
“This is still partly a result of the global recession fueled by rising inflation and interest rates, as well as rising energy prices from the war between Russia and Ukraine,” Ms. Sanchez said.
Headline inflation accelerated to 6.9% in September from 6.3% in August as food and utility prices continued to rise. Inflation averaged 5.1% at the end of September, still below Bangkok Sentral ng Pilipinas (BSP) forecast of 5.6% for the full year.
The economy grew 7.6% year-on-year in the third quarter.
“A combination of geopolitical factors — the Ukraine war, volatile energy prices, high US interest rates and broader global economic uncertainty — and a wait-and-see attitude towards the new administration’s policies is likely responsible for the decline in foreign investment this year compared to last year.” , said Foundation for Economic Freedom President Calixto V. Chikiamco in a Viber message.
Tereso O. Panga, PEZA’s executive officer and deputy director general for policy and planning, said in a Viber message that the agency expects to approve several key items in its upcoming meetings.
“We remain optimistic that we will meet our 6% to 7% growth target for 2022 given the high GDP growth forecast for the Philippines, making it one of the best performing economies in the region, and aggressive support from President Ferdinand R Marcos, Jr. and Secretary of Commerce Alfredo E. Pascual to promote the Philippines as a smart investment choice in the region and ecozones to attract strategic, high-tech, high-value investments,” Mr. Panga said.
Rizal Commercial Banking Corp. chief economist Michael L. Ricafort said investment could potentially pick up in the most recent quarter.
“Foreign investment in the country could pick up in the coming months as the new government took office as of June 30, 2022, especially given the investment pledges from recent visits to Indonesia, Singapore and the US,” said Mr. Ricafort. — Revin Mikhael D. Ochave