Total foreign investments (FI) approved in the third quarter of the year plunged by 45.8 percent due to the spike in cases during the period amid the spread of the coronavirus disease 2019 (COVID-19) Delta variant.
According to the Philippine Statistics Authority (PSA), the investment pledges in the third quarter amounted to P16.82 billion. In the same period a year ago, the figure was at P31.03 billion.
“The decline in the foreign investment commitments in the third quarter of 2021 could have been attributed to the record high new COVID-19 cases posted in September 2021 (26,303 on September 11, 2021) that led to tighter restrictions during the quarter,” Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said in an email message yesterday.
“Going forward, foreign investment commitments could go up in the fourth quarter of 2021 amid measures to further re-open the economy towards greater normalcy, with the national adoption of the alert level system that have granular lockdowns and away from large scale lockdowns seen in the past, with the current alert level nationwide now at 2,” Ricafort added.
Ricafort said the accelerated COVID-19 vaccination that led to the significant reduction in new COVID-19 local cases to 17-month lows and would help justify further re-opening of the economy towards greater normalcy would help attract more FI into the country.
“The CREATE (Corporate Recovery and Tax Incentives for Enterprises) Law that reduced corporate income tax rates by at least five percentage points retroactive July 2020 and also provided greater certainty on investment incentives would also help attract more FDIs into the country,” Ricafort said.
The PSA said FI commitments for the third quarter of 2021 were mainly driven by investments from Japan which accounted for 66.4 percent of the total approved FI, followed by Netherlands (9.2 percent) and British Virgin Islands (4.2 percent).
Japan committed P11.16 billion, while Netherlands and British Virgin Islands pledged P1.56 billion and P698.32 million, respectively.
Manufacturing bested all other industries as it stands to receive P11.01 billion or 65.5 percent of the total FI pledges.
Real estate activities came in second with investment commitments valued at P2.7 billion or 16 percent share, followed by administrative and support service activities with P2.38 billion or 14.2 percent FI contribution, the PSA said.
Majority of the approved FI during the third quarter of 2021 amounting to P8.45 billion (50.2 percent) was intended to finance projects in Calabarzon. This was followed by Ilocos Region with P3.4 billion (20.2 percent) and Central Luzon with P2.12 billion (12.6 percent). – Angela Celis
