Investment scenario declining.
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It is very difficult times that the nation is undergoing due to the war on drugs and the Marawi crisis apart from many other factors. Whoever you choose to blame, the nation is facing setbacks.
But, with the climate being so bad, the situation could have been far worse. Along with the other areas of worry, the investment climate also seems to be bearing some of the brunt.
Not surprisingly, commitments made by foreign investors declined by more than half. Seen on a year-on-year basis the second quarter saw a reduction of 55% in the pledges. That translates to the decline pulling down the figure from P 40.4 billion to P18.2 billion.
The Philippine Statistics Authority (PSA) announced on Friday that this was on account of the withdrawal of approved commitments by 7 seven investment promotion agencies (IPAs) for the quarter ending June 2017.
IPAs approve the projects and provide incentives to the investors.
The pledges have shown a falling trend for the last four quarters. However, speaking of this financial year, the approved investments dropped P 25 billion against the figure of P66.6 billion last year. This translates to a decline of 38.4%.
The pledges for the first quarter had dropped to P22.9% losing 12.8% from last year. This trend is a continuation from the last two quarters of last fiscal. The heaviest fall had been during the third quarter of last fiscal.
After that, the trend carried on till the current quarter and may not reverse soon.
In effect, the pledges by foreign investors are maintaining a downward trend but the situation is not so alarming. Under the circumstances prevailing now, the damage could have been much worse.
Some detractors’ theories state that the investment climate has been suffering since Duterte became President. But, this argument did not hold any substance since foreign investments increased substantially. IPA-approved investments rose to P 40.4 billion in the second quarter of 2016. The spurt of 11.5% occurred during the election of President Duterte. The first quarter had also risen by 19.2% to P 26 billion.
The reason for the spurt was pledges from:
• The United States pledged P 2 billion,
• Japan pledged P4.8 billion, and
• Singapore promised an investment of P2.4 billion.
What is significant is that more than P2.3 billion i.e. a third of these pledges were for the manufacturing sector alone.
Moreover, the pledged allocations for real estate sector while by foreigners for administrative and support service activities stood at P4.1billion. However, clubbing up investments of Filipinos, the figure for the second quarter soared to P230.5 billion.
This was a jump of 29.7% over the pledges for the corresponding quarter of last year. Thus, the second quarter represented over 92% of the total pledged IPA-approved investments.
Besides, the potential for creating jobs was over 95000.This was an increase of nearly 30% jobs over the previous year due to the commitments.
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Written for: Lars-Magnus Carlsson.
Saturday, September 16, 2017