Approved foreign investment pledges bounce back in 2021

By Ana Olivia A. Tirona, Researcher

FOREIGN INVESTMENT pledges soared by 71% in 2021, thanks to a surge in commitments in the fourth quarter as the economy gradually reopened, preliminary data from the Philippine Statistics Authority (PSA) showed on Tuesday. 

Total approved foreign investments stood at P192.34 billion last year, beating the P112.12 billion seen in 2020 but still less than half of the P390.11 billion recorded in 2019.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion attributed the higher foreign investment commitments to the looser mobility curbs and increased economic activity in the last three months of the year.

“It was entirely because the economic and movement restrictions were easing and easing fast in fourth quarter 2021,” Mr. Asuncion said in an e-mail interview.

In November last year, the government relaxed the restrictions for Metro Manila and other locations to Alert Level 2.

Foreign investments surged almost fourfold year on year to P133.47 billion in the October to December period, from the P36.49 billion recorded in the same period in 2020. This was also the highest in nine quarters or since the P182.44 billion recorded in the third quarter of 2019.

Foreign investors may have started to position themselves as the country began reopening the economy in the fourth quarter, Mr. Asuncion said.

“They may have also continued original plans initially thwarted by the pandemic,” Mr. Asuncion said.

Singapore was the top source of approved foreign investment pledges last year with P80.17 billion, eight times more than the P9.10 billion in 2020. Investment commitments from Singapore accounted for 41.7% of the total.

For Mr. Asuncion, Singapore’s investments were “definitely noticeable,” despite its own struggles.

“Even though the Philippines is not at par in terms of the pandemic control and management, Singapore still managed to go after the Philippines for its investments,” he said.

The PSA data compiles the 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).

This differs from the actual foreign direct investments tracked by the Bangko Sentral ng Pilipinas for balance of payments purposes.

The BoI contributed the biggest chunk of the foreign investment pledges with P151.80 billion, or 78.9% of last year’s total.

PEZA was second with P35.83 billion, accounting for 18.6% of the total, followed by CDC with P3.68 billion, AFAB with P548.4 million, SBMA with P395.4 million, CEZA with P74.1 million, and BoI-BARMM with P20 million.

In the fourth quarter alone, the information and communication industry received approved foreign investment pledges worth P127.17 billion, accounting for 95.3%. This was followed by manufacturing with commitments worth P2.13 billion, as well as administrative and support service activities with P2.08 billion.

Around P1.90 billion of the investment commitments will go to projects in the Cavite-Laguna-Batangas-Rizal-Quezon Region, south of Metro Manila. Central Luzon and the National Capital Region followed with P1.46 billion and P1.17 billion, respectively.

Meanwhile, investment pledges from Filipino nationals grew annually by 16.3% to P273.50 billion in the fourth quarter. It accounted for 67.2% of the combined local and foreign pledges worth P406.96 billion, which was also up by 49.8%.

Assuming the projects materialize, foreign and local investments pledged during the period are expected to generate 19,447 jobs across industries. This was 20% less than the 24,279 projected jobs a year ago.

Mr. Asuncion expects foreign investments to improve in the first quarter of 2022, despite the Omicron-driven surge in January.

“Although mobility trends point to more people staying home because of the new variant, the impact on people movement has been short-lived and people are now beginning to move and carry out economic activities more and more compared to the previous January weeks,” he said.

“The shift to a lesser restricted state or the shift to Alert Level 2 in the NCR of late may bode well for better approved foreign investments.”