APPROVED foreign direct investment (FDI) pledges slumped to the worst level in three years in 2020 amid the coronavirus pandemic, data released by the Philippine Statistics Authority (PSA) on Wednesday showed.
The PSA said foreign investment pledges approved by the country’s investment promotion agencies for the full year hit P112.12 billion, down by 71.3% year on year. This was the lowest amount since the P105.75 billion worth of investments approved in 2017.
The full-year tally came after a lackluster performance in the fourth quarter, when approved investments plunged by 67.5% year on year to P36.48 billion from P112.11 billion a year earlier.
FDI commitments are different from actual capital inflows tracked by the Bangko Sentral ng Pilipinas (BSP) for balance of payments purposes. Latest available BSP data showed net FDI inflows dropping by 10.8% year on year to $5.8 billion in the 11 months to November.
The United States was the top source of approved foreign investments last year with P35.37 billion, 2.6 times more than P13.48 billion in 2019. Investment commitments from the US accounted for 31.5% of the total.
China followed with P15.6 billion, which was 82.4% lower than P88.67 billion investments pledged in 2019.
The United Kingdom ranked third with P13.08 billion — almost five times more than its pledges in 2019.
The PSA report also counted investment pledges from the government’s seven investment promotion agencies — the Authority of the Freeport Area of Bataan (AFAB), 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).
PEZA contributed the biggest chunk of the foreign investment pledges with P59.73 billion, or 53.3% of last year’s total.
BoI was second with P47.73 billion or 42.6%, followed by CDC with P2.57 billion, CEZA with P1.26 billion, SBMA with P431 million, AFAB with P395.1 million, and BoI-BARMM with P3 million.
In the fourth quarter alone, the transportation and storage sector received the biggest portion of approved foreign investment pledges worth P14 billion, accounting for 38.4%. This was followed by manufacturing with commitments worth P10.37 billion or 28.4%, as well as real estate activities at P6.96 billion or 19.1%.
The bulk of the approved investments in the fourth quarter — 62.4% at P22.77 billion — will go to projects in the Cavite-Laguna-Batangas-Rizal-Quezon Region south of Metro Manila.
Meanwhile, Central Luzon and the National Capital Region followed with P6.68 billion (18.3%) and P5.15 billion (14.1%), respectively.
Meanwhile, total investment pledges reached P270.08 billion in the fourth quarter, 34.5% less than P412.2 billion a year ago.
Assuming the projects materialize, foreign and local investments pledged during the period are expected to generate 35,414 jobs across industries, less than 55,946 projected jobs a year ago.
Asian Institute of Management Economist John Paolo R. Rivera said lower FDI pledges reflect investor confidence in the Philippines relative to other competing countries.
“Other countries may be more lucrative to invest in relative to us because of their pace in managing and containing the pandemic as well as seamlessly securing vaccines… There is some confidence in our economy but not as much as other economies,” Mr. Rivera said, citing last year’s economic performance metrics.
He said he expects approved and actual FDIs to rebound once confidence in the country recovers.
“This can be done by indicating a more stable post-pandemic recovery plan for the economy. We need to project that despite the pandemic, we are as competitive as other economies, particularly with our neighbors,” the economist said. — J.E.Hernandez