Moderate growth expected in job-generating foreign investments

Foreign direct investment (FDI) to the Philippines is expected to grow moderately next year amid a fragile global economic recovery, the Bangko Sentral ng Pilipinas said.

Based on the latest balance of payments (BOP) projections, BSP Governor Amando Tetangco Jr. said the FDI for next year may grow by 20 percent to $1.8 billion from the anticipated $1.5 billion this year.

Besides government’s foreign borrowing and income from investments abroad, FDI is a major component of the country’s capital and financial account and a contributor to the BOP.

In November, the country incurred a BOP deficit of $93 million, a reversal of the previous month’s $896-million surplus. Because of this, the 11-month surplus was reduced to $4.080 billion from the end-October’s $4.173-billion.

“As [the] global economy recovers, obviously there would be [a] move towards expansion, but I don’t think it would be rapid,” Tetangco said.

“The decision on foreign investments in RP will also depend on the outlook of potential investors [on] how [the] global economy will perform in the future,” he added.

Latest BSP data showed that FDI at end-September dropped by 45 percent to $1.387 billion from $2.524 billion last year because of global financial uncertainties.

According to the Philippine Economic Zone Authority (PEZA), the total investments registered with the incentive-giving agency reached P175.365 billion this year, up 13.3 percent from P154.774-billion last year.

About 80 percent of the 502 approved projects were in the manufacturing sector, mostly in the electronics and semiconductor industry. The largest investment pledge was the P62-billion mineral extraction project of Taganito Mining Corp. in Surigao del Norte.

In a briefing, Lilia de Lima, PEZA director general, said this year’s investment figure could still go higher as they have yet to include the additional pledges of Texas Instruments (TI) for its Clark facility.

TI’s expansion this year is worth about P15 billion, and would be on top of the company’s initial investment of P20 billion last year.

PEZA had projected that investments in ecozones this year would grow 10 percent, while exports and jobs would both increase 5 percent.

Projected employment of 79,435 from this year’s new investments however is 3.27-percent lower than the 82,123 jobs estimated from pledges last year.

The PEZA official said that actual ecozone exports at end-November this year were down 22 percent, while jobs contracted 0.5 percent year-on-year.

She said full-year figures would still improve as many locators recovered in December.

For next year, PEZA targets a 15-percent growth in investments. This “could be difficult to achieve, but we have to catch up with other countries in generating investments,” de Lima said. –MARICEL E. BURGONIO AND BEN ARNOLD O. DE VERA, Manila Times