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Philippines: Foreign investment pledges fall 36% in Q1
Government-approved foreign investment pledges dropped to P29.4 billion in the first quarter of the year, which an analyst said could be attributed to concerns related to the coronavirus disease 2019 (Covid-19) pandemic.
In a report on Thursday, the Philippine Statistics Authority (PSA) said the amount was a 36.2-percent decrease from the P46 billion recorded a year ago.
The pledges, it added, came from six investment promotion agencies. These are the Board of Investments (BoI), Clark Development Corp., Philippine Economic Zone Authority, Subic Bay Metropolitan Authority, Authority of the Freeport Area of Bataan, and Cagayan Economic Zone Authority.
The BoI in the Bangsamoro Autonomous Region in Muslim Mindanao reported no investment approvals in the period.
Of the January-to-March pledges, P10.9 billion were for transportation and storage; P9.9 billion for manufacturing; P3.7 billion for administrative and support service activities; P666 million for repair of motor vehicles; P85 million for information and communication; P63 million for agriculture, forestry and fishing; P27.3 million for professional, scientific and technical activities; and P27 million for financial and insurance activities.
“The foreign investment commitments for the first quarter of 2020 were mainly driven by investments from the United Kingdom, which accounted for 20.9 percent, followed by the United States of America and China,” the PSA said.
The UK committed P6.1 billion; the US, P5.7 billion or 19.6 percent; and China, P4.9 billion or 16.7 percent.
Approved investments of both foreigners and Filipinos in the three months ending March were expected to generate 34,814 jobs, down 17.6 percent from the 42,245 projected last year. Of these anticipated jobs, 89 percent would be absorbed by projects with foreign interest.
Commenting on the data, Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said the decline in pledges could be due to global concerns over the coronavirus.
He added, however, that foreign investments could grow in the coming months on improved international investor sentiment on the Philippines.
“The proposed Create (Corporate Recovery and Tax Incentives for Enterprises Act) that aims to reduce Philippine corporate income tax to 25 percent…in the coming months of 2020 and to be reduced further to 20 percent by 2027, and the two-year extension of sunset provisions on incentives would also help attract more foreign investments to the country and provide greater certainty for foreign investors that have waited for the passage of Citira (Corporate Income Tax and Incentives Reform Act) over the past one to two years,” Ricafort explained.
Citira and Create are the previous and latest versions, respectively, of the second package of the government’s Comprehensive Tax Reform Program.
Ricafort also said Create would also give much-needed relief to all corporations, who lost earnings to the lockdowns imposed to curb the spread of Covid-19 in the country.
Source: https://www.manilatimes.net/2020/06/05/business/business-top/foreign-investment-pledges-fall-36-in-q1/729558/