Investment pledges by foreign investors in the Philippines fell 9.3 percent year-on-year in the last quarter of 2016, reversing a 45.6 percent increase in the corresponding 2015 period, official data showed on Friday.
Data released by the Philippine Statistics Authority (PSA) showed that foreign investments approved by the seven government Investment Promotion Agencies (IPA) in October to December dropped to P125.7 billion from P138.6 billion a year earlier.
For full-year 2016, the total approved foreign investments, including those from Filipino investors, fell 10.7 percent to P219 billion from P245.2 billion in 2015.
The decline reflects caution normally seen during an election year, especially in the midst of uncertainty under a new administration, an analyst said.
Joey Cuyegkeng, senior economist at ING Bank Manila, said presidential election years normally make foreign direct investors cautious.
“Once uncertainties over a peaceful transfer of power, political environment and economic policies are seen enhancing the economic outlook and business conditions, foreign direct investments normally increase in the succeeding years,” he said.
Cuyegkeng said there are still outstanding concerns that such investments may see a more modest recovery, but stronger evidence of government efforts to spend on infrastructure, passage and implementation of tax reforms, clearer policies on mining and other sectors are likely to support sentiment and bring about a stronger rebound.
“Assurance to safeguard foreign direct investors and businessmen would also contribute to enhancing business conditions,” he added.
Combined Q4 pledges down 17.3%
Total investment pledges, combining those from Filipino nationals and from foreign investors, showed negative 17.3 percent growth in the fourth quarter to P274.8 billion, compared with positive growth to P332.3 billion in the year-ago period.
Filipino nationals accounted for 54.3 percent of the total approved investment commitments in the fourth quarter, with pledges reaching P149.1 billion.
Among the foreign investors, the Netherlands was the top prospective investing country during the fourth quarter, with P34.9 billion worth of commitments accounting for 27.7 percent of the total foreign investment pledges.
Australia and the United States occupied the second and third ranks, respectively, pledging P31.8 billion or 25.3 percent and P20.1 billion or 16 percent, of the total investment approved in the fourth quarter of 2016.
Approvals by agency, industry, location
Approvals for the investment pledges came from Clark Development Corp., with the agency’s total amount approvals down by 52.8 percent; the Cagayan Economic Zone Authority, down 77.1 percent; the Philippine Economic Zone Authority, down 27.2 percent; and Subic Bay Metropolitan Authority, down 99.8 percent.
A little or no approvals were recorded from the Board of Investments (BOI)-Autonomous Region of Muslim Mindanao during the three-month period.
But the BOI at the national level was the only IPA that posted positive growth in investment approvals among all the approving government agencies – with a sharp 124.7 percent.
The manufacturing sector received the largest amount of foreign investments approved in the fourth quarter of 2016, with P66.8 billion, or a 53.2-percent share.
Electricity, gas, steam, and air conditioning supply came in second, with investment pledges valued at P32 billion, or a 25.4-percent share, followed by administrative and support service activities, with P11.8 billion, or a 9.4-percent share.
In terms of location, the bulk of the approved foreign investments in the fourth quarter was intended to finance projects in the Calabarzon Region, amounting to P68.2 billion, or 54.2 percent.
The next highest investment was for the Cordillera Administrative Region, with P22.2 billion, representing 17.7 percent, followed by the National Capital Region, with P19.2 billion or 15.3 percent.
Foreign and Filipino ventures approved by the IPAs in the quarter are expected to generate 49,054 jobs, the PSA said.
Of the expected jobs, 66.7 percent will come from projects with foreign interest, it added