Philippines: Approved foreign investments jump by 26% to P242 billion in 2022

MANILA, Philippines — Investment commitments from foreign firms registered with investment promotion agencies (IPAs) rose by 30 percent year-on-year in the fourth quarter, leading to a 26 percent growth in the full-year 2022 tally amid the reopening of the economy.

Data released by the Philippine Statistics Authority (PSA) showed a total of P241.89 billion worth of foreign investments were approved by IPAs last year, higher than the P192.55 billion recorded in 2021.

In the fourth quarter last year, approved foreign investments reached P173.61 billion, up from the P133.47 billion in the same quarter in 2021.

These investments were registered with the following IPAs: Authority of the Freeport Area of Bataan, Board of Investments (BOI), BOI-Bangsamoro Autonomous Region in Muslim Mindanao, Clark Development Corp., Philippine Economic Zone Authority, and Subic Bay Metropolitan Authority.

Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said in an email “the latest improvement in the foreign investment pledges data in 4Q (fourth quarter) 2022 and full-year 2022 may have to do with the reopening of the economy towards greater normalcy with no more restrictions as a policy priority, leading to higher sales, net income or earnings, employment or jobs or livelihood, more business or economic opportunities, thereby enabling foreign investors to be more decisive to locate or invest or expand in the country amid improved economic or business prospects.”

He also attributed the increase to the investment commitments following the visits made by government officials to different countries in recent months.

“Furthermore, CREATE (Corporate Recovery and Tax Incentives for Enterprises) law and other reform measures that eased foreign ownership limits or restrictions since the pandemic also helped attract more foreign investments into the country,” he said.

Of the different IPAs, the BOI had the largest share of approved foreign investments in 2022 amounting to P138.18 billion.

In terms of country source, bulk or 54 percent of the approved foreign investments last year came from Singapore, with the commitments valued at P130.63 billion.

In the fourth quarter alone, Singapore was also the top source of foreign investments, with the pledges accounting for 64.2 percent or amounting to P111.47 billion.

Among the different industries, information and communication stands to receive the biggest chunk or 47.3 percent of foreign investments last year amounting to P114.41 billion.

The information and communication industry is also set to get the bulk or 65.8 percent of foreign investments in the fourth quarter at P114.29 billion.

By location, the largest share or 19 percent of the foreign investments last year will go to Calabarzon (Cavite-Laguna-Batangas-Rizal-Quezon) amounting to P45.88 billion.

In the fourth quarter alone, the biggest share or 18.8 percent of the approved foreign investments is accounted for by Ilocos Region at P32.66 billion.

Approved investments from both foreign and Filipino nationals grew by 22.2 percent to P927.74 billion last year from P758.98 billion in 2021. These are expected to generate a total of 99,425 jobs.

In the October to December period, the combined approved investments of foreign and Filipino nationals reached P478.16 billion last year, 17 percent higher than the P408.54 billion in the same quarter in 2021.

For the coming months, Ricafort said foreign investments could continue to increase with the economy expected to post one of the fastest growth rates in the region, and given the country’s attractive demographics, as well as the economic reopening of China.

He said high inflation and a recession in the US, however, could still be risk factors on foreign investments and overall global economic growth.