Thursday, June 19, 2025

Foreign investment Q1 approved pledges plunge 82%

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Foreign investment (FI) pledges approved by the government in the first quarter of 2025 plunged 82 percent as a pall of global uncertainty sent investors to the sidelines.

On Thursday, the Philippine Statistics Authority (PSA) said approved pledges by foreign investors fell to P27.99 billion in the January-March period this year from P155.26 billion a year earlier.

Combined investments by Filipinos and foreign nationals as approved reached a total of P181.93 billion in the first quarter, a 43.7 percent drop from P323.27 billion posted in the comparative quarter of 2024.

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Filipino nationals contributed P153.94 billion, or 84.6 percent of the total approved investments, the PSA said.

Global disruption

Analysts said the decline in FIs was due to investors’ wait-and-see stance amid uncertainties here and abroad, notably the worldwide disruption caused by US President Donald Trump’s tariff policy.

“Globally, heightened uncertainty from ongoing trade tensions, especially the recent tariff measures from the US, has made investors more cautious, particularly in export-dependent economies,” John Paolo Rivera, a senior research fellow at the Philippine Institute for Development Studies, said.

“Domestically, while structural reforms continued, lingering policy uncertainties and delays in finalizing incentive packages under the CREATE MORE law may have contributed to a wait-and-see attitude among investors,” he said.

Rivera added that elevated borrowing costs globally and tighter financial conditions may have also made investors more selective.

“To restore momentum, the Philippines must work on signaling consistency in investment policies, fast-tracking approvals,

and actively promoting its competitive sectors amid global supply chain shifts,” Rivera said.

Reinielle Matt Erece, an economist at Oikonomia Advisory & Research Inc. said investors have assumed a wait-and-see posture, given the uncertain global trade environment and future moves from the country’s central bank.

After trade tensions peaked in April, “we may expect investments to continue slowing down,” Erece said.

Strong domestic spending

“The country’s domestic economy may provide some cushion to investments, as strong consumer and government spending and expectations of rate cuts all point to strong economic activity amid a slowing global economy. This may help in attracting investments,” he added.

Michael Ricafort, Rizal Commercial Banking Corp.’s chief economist, shared a similar insight: “Sentiment largely weighed since (US President Donald) Trump won the presidency (and) started the higher US import tariffs in March 2025, especially on China, Canada, and Mexico, and culminated on April 2, 2025, with the reciprocal tariffs. This led to cautiousness by global investors, adopting a wait-and-see attitude amid the increased volatility in the global financial markets.”

“Furthermore, foreign investors also waited for CREATE MORE, which was already signed into law on Nov. 11, 2024, but the implementing rules and regulations came out on Feb. 17, 2025,” Ricafort said. “This would now make foreign investors more decisive on whether or not to locate in the country, going forward,” he added.

Ricafort said some local political noise also partly weighed on the latest data, as did the China-Philippines tensions in disputed waters and other geopolitical risks in recent months.

Top proponents

PSA first-quarter 2025 data showed South Korea was the top source of Fl pledges, with commitments amounting to P12.36 billion, or 44.2 percent of the total approved Fl.

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The United States came in second with P3.08 billion (11 percent), followed by China with P2.88 billion (10.3 percent).

Real estate activities attracted the largest share of foreign investment, amounting to P10.79 billion (38.5 percent).

This was followed by the manufacturing industry, with P6.14 billion (21.9 percent), and administrative and service activities, with  P5.35 billion (19.1 percent).

Regional share of investment

The PSA said Central Luzon received the highest share of foreign investment pledges, amounting to P14.9 billion, or 53.3 percent of the total.

The National Capital Region followed, with P6.78 billion (24.2 percent) and Calabarzon with P3.95 billion (14.1 percent).

Seven investment promotion agencies reported foreign investment approvals during the period. These are the Authority of the Freeport Area of Bataan, Bases Conversion and Development Authority, Board of Investments, Clark Development Corp., Cagayan Economic Zone Authority, Philippine Economic Zone Authority, and Subic Bay Metropolitan Authority.

Gaining steam

Meanwhile, the electricity, gas, steam, and air conditioning supply industry received the largest share of total approved investment from foreign and Filipino nationals, amounting to P61.98 billion (34.1 percent).

The manufacturing industry came next with P38.24 billion (21 percent), followed by real estate activities with P34.98 billion (19.2 percent).

Approved investment from both foreign and Filipino nationals in the first quarter of 2025 are expected to generate 31,848 jobs, representing a 4.7 percent decline from the 33,431 jobs projected in the same period of 2024, the PSA said.

Of the total expected employment, 60.6 percent, equivalent to 19,303, is attributed to projects with foreign interest.

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