Foreign investment pledges surge

In 3rd quarter

MANILA, Philippines —  Investment commitments from foreign firms approved by investment promotion agencies (IPAs) jumped by 434.4 percent in the third quarter from a year ago, with the bulk going into manufacturing activities.

Data from the Philippine Statistics Authority (PSA) released yesterday showed that total foreign investments approved by IPAs rose to P146.75 billion from July to September, significantly higher than the P27.46 billion in the same period last year.

These foreign investment pledges were approved by the Board of Investments, BOI-Bangsamoro Autonomous Region in Muslim Mindanao, Clark Development Corp., Cagayan Economic Zone Authority, Philippine Economic Zone Authority (PEZA) and Subic Bay Metropolitan Authority.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said in an email that the sharp increase in foreign investment pledges in the third quarter “may be partly encouraged by the approval of the CREATE MORE (Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy) Bill by the bicam in early September (eventually signed into law on Nov. 11), thereby making foreign investors or locators more decisive to invest in the country.”

He said the higher foreign investment commitments may also be due to the start of interest rate cuts after nearly four years in the US and in the Philippines, which reduced borrowing costs for new investments and expansion projects.

Manufacturing received the largest amount of approved foreign investment commitments, worth P70.57 billion or 48.1 percent of the total in the third quarter.

Electricity, gas, steam and air conditioning supply had the second biggest share with P51.92 billion or 35.4 percent, followed by real estate activities with P13.13 billion or 8.9 percent.

South Korea was the biggest source of foreign investment pledges, with its investment commitment amounting to P53.72 billion or 36.6 percent of the total in the third quarter.

Switzerland came in next with P51.84 billion or 35.3 percent share, followed by Japan at P15.96 billion or 10.9 percent share.

In terms of location, Calabarzon (Cavite-Laguna-Batangas-Rizal-Quezon) accounted for the largest share of approved foreign investment pledges, amounting to P58.86 billion or 40.1 percent of the total in the July to September period.

The Bicol Region placed second with P51.84 billion or 35.3 percent share, followed by Central Luzon with P15.20 billion or 10.4 percent.

Approved investments from foreign and Filipino nationals posted a 542.1-percent growth, to P541.29 billion in the third quarter from just P84.29 billion in the same period of 2023.

These investments from foreign and Filipino sources are expected to create 33,727 jobs in the third quarter, 49.4 percent higher than the  22,571 expected employment in the same quarter of the previous year.

Of the total employment to be generated, 19,265 jobs would be from foreign investments.

With the recent approval of the CREATE MORE Act, PEZA director general Tereso Panga said the Philippines is expected to become a more attractive location for foreign investments.

“With the CREATE MORE Act now in place, we are entering a new era of investment-driven growth that will solidify the Philippines as a premier destination for foreign direct investments in Asia. PEZA remains steadfast in its commitment to creating opportunities, generating jobs and uplifting communities across the country,” he said.

Ricafort said foreign investments or foreign direct investments are expected to continue to increase in the coming months, especially after the passage of the CREATE MORE  and as further rate cuts are made.

“However, the offsetting risk factors include possible more protectionist policies by US President-elect [Donald] Trump, who encouraged US businesses to invest more in the US rather than abroad,” he said.

He also said possible trade wars that could slow down global trade and global economic growth could also slow down foreign investments into the Philippines.