But economists focus more on actual FDIs
Investment commitments from foreign investors for the Philippines fell sharply in the first three months of the year, but private economists dismissed the decline in pledges and said actual fund inflows to the country have been rising much faster than anywhere in Southeast Asia.
Total foreign investments (FI) approved in the first quarter of 2014 by the seven Investment Promotion Agencies (IPA) fell 25.6 percent to P37.4 billion from P50.3 billion approved in the same period last year, data from the Philippine Statistical Authority (PSA) showed on Friday.
These IPAs include the Board of Investments (BOI), Clark Development Corporation (CDC), Philippine Economic Zone Authority (PEZA), Subic Bay Metropolitan Authority (SBMA), Authority of the Freeport Area of Bataan (AFAB), BOI-Autonomous Region of Muslim Mindanao (BOI-ARMM), and Cagayan Economic Zone Authority (CEZA).
“Approved foreign investments do not represent actual investments generated but rather foreign investment commitments which may come in the near future. This consists of equity, loans and reinvested earnings,” the PSA said.
Economists said the drop in both foreign and local investment pledges during the quarter should not be cause for worry as actual foreign direct investment (FDI) is more important in the context of Philippine economic growth.
“I’ve noticed that the pledges do not usually reflect the business climate accurately in the past,” Nicholas Antonio Mapa, Bank of the Philippine Islands associate economist said in an e-mail.
Alvin Ang, economist at the University of Santo Tomas, expressed a similar view, saying in a text message: “I’m not going to be worried with pledges. It’s more important to have the actual investments.”
Recently, the United Nations Conference on Trade and Development (UNCTAD) showed in its World Investment Report 2014 that FDI inflow in the Philippines grew 24 percent to $3.8 billion last year.
Although the absolute amount was nowhere near comparable to the investment superstars in the region, the rate of growth appeared to be most impressive.
The report said FDI inflow into Asean last year increased by 7 percent to $125 billion, with Singapore attracting half of it or $63.7 billion, Indonesia getting $18.4 billion, Thailand attracting $12.9 billion, Malaysia taking $12.3 billion, and Vietnam taking $8.9 billion.
Subic, Clark zones draw biggest pledges
According to the latest data, of the seven IPAs, only SMBA and CDC registered significant growth during the quarter.
SMBA registered the highest increase in FI commitments, amounting to P11.3 billion in the first quarter which is about 84 times the P134.7-million worth of pledges in the comparable quarter last year.
Investment pledges in CDC were valued at P358.6 million in Q1 2014, which is about seven times higher than P50.4 million in the same period last year.
However, FI commitments in four IPAs namely BOI, CEZA and PEZA, declined.
Pledges in BOI dropped by 72.7 percent to reach P4.7 billion in the first quarter from 17.2 billion last year, while commitments in CEZA eased by 57.4 percent from P86.2 million to P36.7 million, and FI pledges in PEZA went down by 36.2 percent from P32.9 billion from P21 billion.
Pledges in BOI-ARMM reached P36.9 million during the quarter but the PSA failed to give the IPA’s comparable year-earlier figure. FI commitments in AFAB for the first quarter of 2014 were also not available.
Manufacturing and administrative and support service activities drew the largest amount of investment pledges during the quarter.
Manufacturing bested all other industries as it stands to receive 74.1 percent of total FI pledges or P27.7 billion.
Administrative and support service activities came in second, with investment commitments valued at P4.2 billion, contributing 11.2 percent, followed by electricity, gas, steam, and air conditioning supply at P2 billion, with 5.3 percent share.
Chinese top investors
China was the top investing country during the quarter at P9 billion as it shared 24.2 percent of the total FI commitments.
Japan and Singapore occupied the second and third posts, pledging P8.3 billion or 22.3 percent and P4.3 billion or 11.4 percent, respectively, of the total FI approved in the first quarter of 2014.
The PSA also showed that the total combined approved investments from both foreign and Filipino nationals in the first quarter of 2014 dropped 29.5 percent to P107.4 billion from P152.3 billion registered in the comparable quarter in 2013.
Pledges from Filipino nationals stood at P69.9 billion which accounted for 65.2 percent of the total approved investments during the quarter.
The statistical agency also said that foreign and Filipino ventures approved by the IPAs in the first quarter of 2014 are expected to generate 48,489 jobs, increasing by 42.1 percent from previous year’s projected employment.
Out of these anticipated jobs, 78.7 percent or 38,179 jobs would come from projects with foreign interest, it said.
For the full-year 2013, the total approved FI down slid by 5.4 percent, plunging from P289.5 billion in 2012 to P274.0 billion in pledges in 2013.