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Total foreign direct investments (FDI)1 approved in the first quarter of 2012 by five investment promotion agencies (IPAs), namely: Board of Investments (BOI), Clark Development Corporation (CDC), Philippine Economic Zone Authority (PEZA), Subic Bay Metropolitan Authority (SBMA), and Authority of the Freeport Area of Bataan (AFAB) amounted to PhP 18.4 billion, 16.3 percent lower than the PhP 22.0 billion approved in the same period of the previous year. No investment pledges were received by the Board of Investments-Autonomous Region of Muslim Mindanao (BOI-ARMM) for first quarter of 2012 (Figure 1 and Part II – Tables 1a and 1b).
Meanwhile, total approved foreign and Filipino investments for Q1 2012 posted PhP 43.9 billion, a decrease of 72.9 percent from last year’s first quarter commitments of PhP 162.0 billion (Figures 2 and Part II – Table 5).
Japan, one of our constant sources of FDI was the top investing country during the quarter at PhP 4.9 billion as it shared 26.6 percent of the total FDI commitments. Netherlands and USA occupied the second and third posts, pledging PhP 2.3 billion and PhP 2.1 billion, which accounted for 12.6 percent and 11.5 percent, respectively, of the total FDI approved in Q1 2012 (Part II - Table 2).
Manufacturing, a consistent top recipient of FDI commitments, again bested all other industries as it stands to receive 65.3 percent or PhP 12.0 billion. Administrative and support service activities came in second with investment pledges valued at PhP 2.4 billion, contributing 12.8 percent, followed by real estate activities and accommodation and food service activities, with 8.8 percent share and 8.7 percent share, respectively (Part II – Table 3).
Foreign direct investments in the Balance of Payments (BOP)2, Q1 2012
FDI in the Balance of Payments (BOP) as compiled by the Bangko Sentral ng Pilipinas (BSP) recorded net inflows of US$ 850.0 million in Q1 2012, higher by 72.4 percent than the US$ 493.0 million recorded in the same period last year (Part II – Table 14).
In peso terms, FDI in the BOP for the first quarter of 2012 posted a net inflow of PhP 37.0 billion, 71.2 percent higher than the PhP 21.6 billion in the same period of the previous year (Part II – Table 13).
Approved investments of foreign and Filipino nationals, Q1 2012
Approved investments of foreign and Filipino nationals in the first quarter of 2012 totaled PhP 43.9 billion, 72.9 percent lower than the PhP 162.0 billion registered in the same period of the previous year. Pledges from Filipino nationals stood at PhP 25.5 billion which accounted for 58.0 percent of the total approved investments in the quarter (Part II – Table 6).
Projected employment from approved investments of foreign and Filipino nationals, Q1 2012
Foreign and Filipino ventures approved by the five IPAs for the first quarter of 2012 are expected to create 34,585 jobs, decreasing by 17.2 percent from previous year’s projected employment of 41,780 jobs. Out of these anticipated jobs, 93.4 percent or 32,292 jobs would come from projects with foreign interest (Part II – Tables 4 and 8).
2 Refers to net FDI flow s consisting of non-residents’ equity capital placements less non-residents’ equity capital w ithdrawals plus reinvested earnings plus net other capital (intercompany loans).
Approved investments of foreign and Filipino nationals in Information and Communications Technology (ICT), Q1 2012
Total investment pledges in information and communications technology (ICT) of foreign and Filipino nationals in the first quarter of 2012 totaled PhP 2.9 billion, 68.0 percent lower than the PhP 9.0 billion recorded in Q1 2011. Projects in ICT accounted for 6.6 percent of total approved investments of foreign and Filipino nationals during the quarter (Part II – Tables 6 and 9).
Foreign nationals remained as the major source of investment pledges in ICT for Q1 2012, committing 92.8 percent or PhP 2.7 billion worth of investments. It however declined by 69.9 percent from PhP 8.9 billion pledged in Q1 2011. FDI in ICT accounted for 14.5 percent of the total FDI approved during the period (Part II – Tables 9 and 10).
Part I – ANALYSIS
A. Approved foreign direct investments (FDI)
A.1 Total approved FDI, Q1 2012
FDI applications received and approved in the first quarter of 2012 by the Authority of the Freeport Area of Bataan (AFAB), Board of Investments (BOI), Clark Development Corporation (CDC), Philippine Economic Zone Authority (PEZA), and Subic Bay Metropolitan Authority (SBMA) decreased by 16.3 percent from PhP 22.0 billion in Q1 2011 to PhP 18.4 billion. No investment pledges were received by BOI-ARMM during the period. Among the investment promotion agencies (IPAs), SBMA registered the highest increase at 139.6 percent from PhP 60.2 million in Q1 2011 to PhP 144.1 million. BOI likewise recorded an increase of 53.3 percent, from PhP 2.4 billion in Q1 2011 to PhP 3.7 billion. On the other hand, PEZA and CDC suffered double digit declines of 27.7 percent and 13.4 percent, respectively (Table A and Part II – Table 1b).
The bulk of FDI applications came from PEZA, cutting in 69.4 percent or PhP 12.8 billion pesos of the total FDI. Trailing far behind is BOI sharing 20.3 percent or PhP 3.7 billion worth of investments. CDC contributed 8.7 percent or PhP 1.6 billion while AFAB and SBMA contributed 0.9 percent and 0.8 percent of the total FDI, or PhP 165.9 million and PhP 144.1 million, respectively.
A.2 Top performing countries, Q1 2012
Top prospective investing countries for the first quarter of 2012 include Japan, Netherlands and USA. Japan topped the list, committing PhP 4.9 billion or 26.6 percent of the total FDI applications for the quarter (Part II - Table 2). Japan’s prospective ventures are mostly in manufacturing, particularly, in the production of vehicles, wire harness, and various electronic and automotive components.
Netherlands and USA accounted for 12.6 percent or PhP 2.3 billion, and 11.5 percent or PhP 2.1 billion, respectively, majority of which are intended to finance projects in manufacturing, and administrative and support service activities.
A.3 Top performing industries, Q1 2012
A large chunk or 65.3 percent of the total FDI approved in Q1 2012 is intended to fund projects in manufacturing. The PhP 12.0 billion worth of investments committed to manufacturing, however, is 28.2 percent lower than the amount committed in Q1 2011. Joining manufacturing among the top recipients of approved FDI are administrative and support service activities with 12.8 percent or PhP 2.4 billion followed by real estate activities with a committed amount of PhP 1.62 billion or 8.8 percent share, and accommodation and food service activities at PhP 1.60 billion or 8.7 percent share (Figure 2, Table C and Part II – Table 3).
Sources of data: AFAB, BOI, BOI ARMM, CDC, PEZA, SBMA
3 Starting Q1 2011 FDI report, the 2009 Philippine Standard Industrial Classification (PSIC) has been adopted in classifying the industry. The 2009 PSIC w as used for the years 2010 and 2011 to make the data comparable.
A.4 Projected employment from approved FDI, Q1 2012
FDI projects approved by AFAB, BOI, CDC, PEZA and SBMA in the first quarter of 2012 are seen to generate 32,292 jobs, slightly lower by 0.2 percent than the 32,347 jobs expected in the same period a year ago (Part II – Table 4).
PEZA-approved FDI projects are envisaged to generate the most number of jobs at 21,972 jobs, accounting for 68.0 percent of the total jobs expected for the quarter. BOI would account for 8,201 jobs or 25.4 percent while AFAB would share 1,385 jobs or 4.3 percent . FDI projects from CDC and SBMA would have a share of 1.4 percent and 0.9 percent, respectively of the total expected jobs.
Among the five IPAs, SBMA posted the highest increase in projected employment, expanding by 227.0 percent from the 89 jobs recorded in Q1 2011, followed by BOI and CDC at 99.3 percent and 45.7 percent, respectively. On the other hand, PEZA’s projected employment declined by 21.1 percent during the quarter.
B. Approved investments of foreign and Filipino nationals
B.1 Total approved investments of foreign and Filipino nationals, Q1 2012
Approved investments of Filipino and foreign nationals reached PhP 43.9 billion in the first quarter of 2012, decreasing by 72.9 percent than the PhP 162.0 billion committed in the same period in 2011. About 58.0 percent of this amount would be supplied by ventures from Filipino investors. However, investments of Filipino nationals approved in Q1 2012 declined by 81.8 percent from PhP 140.0 billion in Q1 2011 to PhP 25.5 billion (Figure 4 below and Part II – Table 6).
About 45.2 percent of investment commitments made by foreign and Filipino nationals for the quarter were coursed through PEZA which approved PhP 19.8 billion worth of investment pledges. Meanwhile, 41.8 percent of the total approved investments made by foreign and Filipino nationals amounting to Php 18.4 billion were approved by BOI. The remaining 13.0 percent of the total investments were approved by CDC, SBMA, and AFAB. (Part II - Table 5).
B.2 Total approved investments of foreign and Filipino nationals by industry, Q1 2012
Investment pledges of foreign and Filipino nationals committed during the quarter are intended to fund projects in manufacturing as it stands to receive PhP 15.2 billion or 34.6 percent of the total approved investments. Of this amount, 20.8 percent or PhP 3.2 billion would come from Filipino investors (Figure 5 below and Part II - Tables 3 and 7).
Real estate activities would get 31.3 percent of the pie or PhP 13.8 billion, 88.2 percent of which would come from Filipino investors. Accommodation and food service activities ranked third with investment pledges from foreign and Filipino nationals, amounting to PhP 5.4 billion, contributing 12.3 percent (Figure 5 below and Part II – Table 7).
B.3 Projected employment from approved investments of foreign and Filipino nationals, Q1 2012
Projects from foreign and Filipino investors approved in the firs t quarter of 2012 are seen to generate 34,585 jobs, 17.2 percent lower than the 41,780 potential jobs in the same period last year. Of the projected employment during the quarter,66.1 percent would come from PEZA with 22,869 prospective jobs. BOI would supply 24.9 percent or 8,622 jobs while SBMA, CDC, and AFAB would jointly share 8.9 percent or 3,094 prospective jobs (Part II – Table 8).
AFAB posted the highest increase in potential jobs, growing about one and a half times the 537 jobs expected last year, followed by SBMA at 125.8 percent, expanding from 431 jobs in Q! 2011 to 973 jobs. The other IPAs suffered a reduction in potential jobs by 33.9 percent for CDC, 20.8 percent for PEZA, and 20.0 percent for BOI.
B.4 Projected employment from approved investments of foreign and Filipino nationals by industry, Q1 2012
Of the 34,585 potential jobs expected from foreign and Filipino projects approved during the quarter, manufacturing would supply
C. Approved investments in the Information and Communications Technology (ICT) Industry
C.1 Total approved FDI in ICT, Q1 2012
Projects in ICT committed by foreign investors in the first quarter of 2012 accounted for 14.5 percent of the total FDI approved during the period (Part II – Table 10).
Foreign nationals remained as the major source of investment pledges in ICT, committing PhP 2.7 billion or 92.8 percent of the total investments in ICT committed by foreign and Filipino nationals in Q1 2012. However, FDI in ICT declined by 69.9 percent from PhP 8.9 billion of the same quarter in 2011. PEZA remained as the top recipient of FDI in ICT, receiving almost all or 99.7 percent of the total FDI pledges (Part II – Tables 10 and 11).
C.2 Total approved investments in ICT of foreign and Filipino nationals, Q1 2012
Pledges in ICT investments made by foreign and Filipino nationals in Q1 2012 declined by 68.0 percent from PhP 9.0 billion in Q1 2011 to PhP 2.9 billion. Filipino investors committed PhP 0.21 billion or 7.2 percent of the total ICT investments. (Table G below and Part II – Table 11).
Prospective ventures in ICT by foreign and Filipino nationals accounted for 6.6 percent of total approved investments in Q1 2012 (Part II – Tables 5 and 9).
C.3 Total approved investments in ICT of foreign and Filipino nationals by ICT sub-industry, Q1 2012
T services remained as the main recipient of investment intentions in ICT of foreign and Filipino nationals as it stands to receive PhP 2.5 billion or 87.7 percent of total ICT projects. A minimal share of 12.3 percent or PhP 0.35 billion was shared by information and communication during the quarter while no ICT investment pledges were made under manufacturing and trade (Part II – Table 11).
C.4 Projected employment from approved investments in ICT of foreign and Filipino nationals by ICT sub-industry, Q1 2012
Approved investments of foreign and Filipino nationals in ICT are anticipated to create 11,920 new jobs in Q1 2012, lower by 39.2 percent than the 19,590 jobs expected in Q1 2012. IT services is expected to supply 79.1 percent of the total employment in ICT or 9,434 new jobs while 2,486 new jobs are seen to be generated from information and communication (Table H below and Part II – Table 12).
Projected employment from ICT industry accounted for 34.5 percent of total jobs expected from the investment projects of foreign and Filipino nationals approved in the first quarter of 2012 (Part II – Tables 8 and 12).
D. Actual foreign direct investments in the Balance of Payments 4
Total BOP FDI in US Dollars and Philippine Pesos5, Q1 2
As reported by the BSP, net FDI inflows for the first quarter of 2012 reached US$ 850.0 million, which is 72.4 percent higher than the net inflows of US$ 493.0 million recorded in the same period of the previous year (Part II – Table 14). Equity capital and reinvested earnings posted positive balances of US$ 931.0 million, and US$ 30.0 million, respectively. On the other hand, other capital, which consists largely of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines, recorded negative US$ 111.0 million (Figure 6 and Part II – Table 14).
4 BSP media release dated June 22, 2012
5 Using monthly averages: Pesos per US Dollar Rate dow nloaded from BSP w ebsite
In peso terms, FDI net inflows for Q1 2012 amounted to PhP 37.0 billion,
