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Louella Desiderio - The Philippine Star
February 15, 2025 | 12:00am
MANILA, Philippines — Foreign investment commitments approved by the government plunged by 39 percent in 2024 from the previous year as investors held back, amid global uncertainties including protectionist policies under the new US leadership and changes in the Philippines’ incentives regime.
Preliminary data from the Philippine Statistics Authority showed that approved foreign investment pledges fell to P543.62 billion in 2024 from P889.24 billion in 2023.
These investments, which were approved by investment promotion agencies, indicate investor interest in the country and have the potential to be realized in the future.
This figure is different from the data released by the Bangko Sentral ng Pilipinas, which tracks actual foreign direct investments that have already been deployed in the country.
The Board of Investments (BOI) approved the bulk or P384.44 billion of the total foreign investment commitments last year.
The Philippine Economic Zone Authority (PEZA) came in next with P101.77 billion, followed by Clark Development Corp. with P35.6 billion, Subic Bay Metropolitan Authority (SBMA) with P15.85 billion, Cagayan Economic Zone Authority with P3.24 billion, Bases Conversion and Development Authority with P2.48 billion, BOI – Bangsamoro Autonomous Region in Muslim Mindanao with P196.72 million and Zamboanga City Special Economic Zone Authority with P49.65 million.
Switzerland was the biggest source of foreign investment pledges last year amounting to P289.06 billion, followed by South Korea with P100.34 billion and the Netherlands with P50.22 billion.
Industries with the largest foreign investment pledges last year were electricity, gas, steam and air conditioning supply with P341.5 billion and manufacturing with P126.13 billion.
In the fourth quarter alone, approved foreign investments dropped by 85.4 percent to P57.7 billion from P394.46 billion in the same period in 2023.
The BOI accounted for the biggest share of approved investments in the fourth quarter last year with P28.1 billion, followed by the PEZA with P15.44 billion and SBMA with P13.64 billion.
In terms of country source, South Korea was the leading contributor to foreign investment pledges, accounting for P26.16 billion or 45.3 percent of the total in the fourth quarter of 2024.
The Netherlands came in next with P9.19 billion (15.9 percent) and Japan with P4.11 billion (7.1 percent).
Among industries, manufacturing accounted for the largest share of foreign investment pledges in the fourth quarter amounting to P30.55 billion (52.9 percent), followed by the transportation and storage industry with P11.87 billion (20.6 percent) and the electricity, gas, steam and air conditioning supply industry with P7.68 billion (13.3 percent).
Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort attributed the decline in foreign investments “to uncertainties on possible protectionist measures by US president [Donald] Trump, who won the US elections on Nov. 5, 2024.”
He said the new US leadership is pushing to bring back investments and jobs to its shores.
He also said some foreign investors were on a wait-and-see mode prior to the signing of the CREATE MORE Act, which aims to enhance the incentives system.
“Some local political noises also partly weighed on the latest foreign investments data; as well as the China-Philippine tensions in disputed waters; alongside other geopolitical risks in recent months,” he said.
He said typhoons that caused disruptions in some areas also affected some foreign investments into the country.
Total approved investments from foreign and Filipino sources reached P1.95 trillion last year, 32.7 percent higher than the P1.47 trillion registered in 2023.
In the fourth quarter of 2024, total approved investments from both foreign and Filipino nationals, however, went down by 36.1 percent to P373.70 billion from P585.17 billion in the same quarter of 2023.
For this year, Ricafort said possible cuts on key policy rates and large banks’ reserve requirements ratio would help lower borrowing costs and spur demand for credit to support investments.
“But all of these would be offset negatively by possible Trump protectionist policies or measures such as threats of higher US import tariffs, among others,” he said.
For his part, Philippine Institute for Development Studies senior research fellow John Paolo Rivera said the recovery in foreign investment pledges depends on structural reforms.
“Continued policy clarity on fiscal incentives, stronger ease-of-doing-business efforts and faster infrastructure implementation will be critical to regaining investor confidence,” he said.
While uncertain global economic conditions may lead to subdued foreign investments, he said targeted sectors like renewable energy, digital infrastructure and business process outsourcing still hold promise.
