Foreign investments

Authorized foreign investment fell again in the third quarter

UNSPLASH

Foreign investment pledges fell again in the third quarter after recovering in the previous three months, according to data from the Philippine Statistics Authority (PSA) released on Tuesday.

Approved foreign investments fell 45.8 percent year-on-year to 16.82 billion pesos in the July-September period, compared to 31.03 billion pesos recorded a year ago.

The decline in the period is a reversal of the 45.5% growth recorded in the second quarter. This annual decline, however, was smaller compared to the 83% drop seen in the third quarter of 2020.

Excluding the previous quarter, the third quarter marked the sixth time that approved foreign investment pledges fell since the start of the coronavirus pandemic.

The 16.82 billion pesos of investments approved during the period was the lowest in five quarters, or since the second quarter of 2020, when pledges stood at 15.46 billion pesos.

Meanwhile, investment pledges from Filipino nationals fell 42.5% year-on-year to P83.66 billion in the third quarter. It accounted for 83.3% of the combined local and foreign pledges worth 100.48 billion pula, which was also down from 43.1%.

Projects approved with foreign interests in the third quarter are expected to generate 10,268 jobs, down 51.7% from a year ago.

If the commitments of the Filipinos are taken into account, these commitments should generate 88,324 jobs if they materialize. This was 175.2% more than the 32,100 additional jobs forecast a year ago.

PSA’s foreign investment commitments differ from the actual foreign direct investment (FDI) tracked by Bangko Sentral ng Pilipinas for balance of payments purposes. Central bank oversight also goes beyond projects and includes other items such as reinvested earnings and lending to Philippine units through their debt instruments.

Only four of the seven investment promotion agencies were able to secure investment commitments from foreigners during the period. Of these, the Philippine Economic Zone Authority contributed the most with 14.68 billion pesos, followed by the Board of Investments with 1.007 billion pesos, Clark Development Corp. with 847.33 million pesos and the Subic Bay Metropolitan Authority with 290.03 million pesos. .

By industry, 11.01 billion pesos or 65.5% of the total foreign investment pledged during the period went to the manufacturing sector, followed by real estate activities with 16% (2.70 billion pesos) and construction activities. administrative and support services with 14.2% (2.38 billion pula).

More than half of the foreign investments promised in the third quarter came from Japan (11.16 billion pula), followed by the Netherlands (1.56 billion pula) and the British Virgin Islands (698.3 million pula).

Only six of the 17 regions have monopolized these foreign promises, the largest of which should finance projects in Calabarzon (8.45 billion pesos). Other regions that recorded foreign pledges were Ilocos Region (3.40 billion pesos), Central Luzon (2.12 billion pesos), National Capital Region (2.10 billion pesos), Central Visayas (609.9 million pesos) and Soccsksargen (136.0 billion pesos). 7 million).

“[T]The outlook for foreign investment has not fully recovered due to the uncertainties caused by the pandemic. [The third quarter] was when we had another lockdown to control the infection outbreak and may have affected the outlook [for the period]UnionBank of the Philippines Chief Economist Ruben Carlo O. Asuncion said via a message on his cellphone.

“I think that [the fourth quarter] will be much better as the country continues to experience a decline in COVID infections,” Asuncion added.

For Victor A. Abola, an economist at the University of Asia and the Pacific: “We should not expect much improvement for the [fourth quarter] because foreign investors will be wait-and-see due to uncertainties on economic policy in view of the next presidential elections [in May]“, he said in an email.

RATIFIED AMENDMENTS
Meanwhile, House lawmakers on Tuesday approved the report of the bicameral conference committee on a bill to amend the country’s foreign investment law.

The House of Representatives has ratified the Report of the Bicameral Conference Committee on the Diverging Provisions of House Bill 300 and Senate Bill 1156, which Seek to Amend Republic Act 7042 or the foreign investments of 1991.

The measure is a priority of President Rodrigo R. Duterte and has been supported by several business groups and foreign chambers.

The Senate has yet to ratify the measure. Once the measure has been approved by both houses of Congress, it will be sent to Malacañang for signature by Mr. Duterte.

Commerce Secretary Ramon M. Lopez said in a Viber message that he expects the measure to be signed by the president by January or February.

Members of the House committee agreed to use the Senate version as the working draft for the reconciled measure.

According to the reconciled version, foreigners are allowed to invest 100% of the capital in the companies of the internal market, except in the fields included in the negative list of foreign investments.

The required number of local direct hires for foreign companies will be reduced to 15 from the current 50.

An inter-agency coordination committee for investment promotion will be created under the proposed law, which will be headed by the Department of Trade and Industry.

The measure will not cover financial institutions regulated by the Bangko Sentral ng Pilipinas and jobs under the jurisdiction of professional regulatory bodies.

Mr. Lopez said the ratification of the bill will help tech companies and start-ups to invest in the Philippines.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the ratification of the measure will help the country’s economic recovery through increased business opportunities and job creation.

“Going forward, foreign investment may increase as part of measures to further reopen the economy to greater normality, with the nationwide adoption of the alert level system,” he said in a statement. a Viber message. — MIUC and RLC Ku