MANILA - Total foreign investments approved in the first quarter of 2018 by investment promotion agencies (IPAs) amounted to P14.2 billion, a contraction of nearly 38 percent compared to the P22.9 billion approved during the same period last year.
Approved foreign investments in the first 3 months of the year fell to their lowest level in nearly eight years or since the P13.8 billion recorded in the second quarter of 2010.
Approved foreign investments refer to commitments and pledges approved by IPAs like Philippine Economic Zone Authority (PEZA) and Board of Investments (BOI). When these investment commitments materialize after a few years they will be classified as foreign direct investments (FDI).
The contraction follows the trend observed in recent quarters. In 2017, investment commitments from foreign firms declined by more than half (51.8 percent) to P105.7 billion from P219 billion in 2016. The 2017 total is the lowest level since 2005.
Analyzing further, approved foreign investments plummeted year-on-year in six of the first seven quarters of the Duterte administration (starting 2016 Q3).
On the other hand, net FDI inflows registered a record high of $10.0 billion in 2017. This is 21.4 percent higher relative to the previous year’s $8.3 billion level.
The upward trend continues with net FDI inflows amounting to $4.8 billion in the first five months of 2018. This figure is 49 percent higher compared to the $3.3 billion total in the same period last year.
In terms of net FDI flows by country of origin, the Netherlands, Japan, Singapore, US and Hong Kong were the top investors from 2015 to 2017.
China, the largest trading partner of the Philippines in recent years, hasn’t contributed as much in the same period. However, it has been gaining ground in the first five months of 2018.
While net FDI flows to the Philippines have been steadily growing in recent years, it’s still lagging behind its ASEAN peers.