The Department of Finance (DOF) said the government approved a total of P192.34 billion in foreign investment pledges in the first 11 months of 2021, up 71.55 percent from the cumulative 2020 level of P112.1 billion.
Still, the amount is only half the pre-pandemic investment pledges of P390.11 billion, the agency said.
However, adjusting for incentives given for foreign investments by the government’s investment promotion agencies (IPA), the Philippine net foreign direct investments (FDI) for the period was at $9.24 billion, surpassing the full-year pre-pandemic FDI of $8.67 billion, the DOF said.
Since 2014, net FDIs have been surpassing investment pledges suggesting that currently, the larger portion of foreign investments do not actually ask for fiscal incentives, the DOF added.
“Indeed, IPAs are not the only foreign investment channels. Following the further liberalization of the banking sector in 2014, foreign banks sought to establish presence in the Philippines. Japan’s MUFG, for instance, bought 20 percent stake in Security Bank in 2016,” the DOF said.
However, it noted that as a percent of gross domestic product (GDP), investment pledges have been trending lower since the onset of the global financial crisis.
“FDI also fell, hitting only 0.50 percent of GDP in 2010 but, in contrast to investment pledges, has since recovered and trended higher, eventually making a record high of as much as 3.09 percent of GDP in 2017, at a time when investment pledges amounted to only 0.64 percent of GDP,” it said.
Capital formation as a percent of GDP meanwhile has also risen in relation to the increase in FDI.
“Note that FDIs are actual transactions in contrast to ‘approved foreign investments’ which are investment commitments or pledges that may materialize in subsequent periods. Note further that, unlike FDI, investment pledges include those with foreign ownership of less than 10 percent of a company’s ordinary shares,” the DOF said.
