INVESTMENTS applied in Philippine economic zones declined more than a quarter from January to July, although capital inflows from overseas jumped double digits to show signs of renewed interest from foreign firms.
The Philippine Economic Zone Authority (Peza) on Monday reported investments secured from January to July fell by about 27 percent to P52.01 billion, from P71.21 billion during the same period last year. These investments translated into 164 new projects and expansions.
Broken down, the seven-month figure showed the disparity in the financial capability between local and foreign investors: the former was bled to the core by the coronavirus pandemic, while the latter managed to post a double-digit growth.
Based on Peza data, domestic investments from January to July plunged nearly 63 percent to P15.75 billion, from P42.46 billion during the same stretch last year. On the other hand, foreign capital inflows for the period grew over 26 percent to P36.26 billion, from P28.75 billion.
Bulk of the foreign investments went into manufacturing, as well as information technology and business process management (IT-BPM), according to the Peza.
Investments in manufacturing rose more than 24 percent to P23.34 billion, from P18.77 billion, while those in the IT-BPM industry surged 37 percent to P11.4 billion, from P8.32 billion. However, the Peza did not disclose the numbers for other activities, including economic zone development, where the slowdown can be attributed.
For the first semester, shipments by economic zone firms amounted to $24.81 billion and their employment totaled 1.47 million—a contraction of 7 percent and 3 percent, respectively, when compared to last year’s figures—the Peza reported.
Peza Director General Charito B. Plaza is optimistic the Philippine economy can recover from the ill effects of the pandemic. Conceding “it is true that the Covid-19 pandemic affected our economy badly,” she vowed the Peza will carry on with its task to pull investors to the country, bearing a mindset of looking at the health crisis both as a lesson and an opportunity.
Plaza stressed the importance of putting up economic zones particularly in the regions even in trying times like this, as they boost countryside growth largely by generating exports and jobs and creating supply chains.
“Covid-19 cannot stop Peza in performing its mandate to register, manage and operate public and private economic zones in the country,” Plaza said. “Peza continues to attract investors to come and invest in the Philippines despite the crisis.
If the trend goes on for the rest of the year for Peza, it will be its third straight year to endure a double-digit decline in investment registrations.
Last year investments applied to the agency slipped by over 16 percent to P117.54 billion, from P140.24 billion in 2018. The Peza leadership has been attributing its declining performance to uncertainties caused by the legislative move to rationalize fiscal incentives.
Image credits: Bernard Testa