Investors cautious amid global trade headwinds
MANILA, Philippines — Foreign investment commitments approved by investment promotion agencies (IPAs) plunged by 82 percent in the first quarter from a year ago as investors took a cautious approach amid global and domestic headwinds.
Data from the Philippine Statistics Authority yesterday showed that total foreign investments registered with IPAs amounted to P27.99 billion from January to March, down from P155.26 billion in the same period in 2024.
These investments were approved by the following IPAs: 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.
When realized, these investments are expected to generate 19,303 jobs.
Philippine Institute for Development Studies senior research fellow John Paolo Rivera said in an email that the sharp drop in total approved foreign investments reflects growing investor caution given challenges in the domestic and global front.
“Heightened trade uncertainty especially with the recent tariff tensions involving the United States, and concerns about the medium-term fiscal path likely dampened investor sentiment,” he said.
Locally, Rivera said the slower than expected first quarter economic growth of 5.4 percent and lingering policy ambiguities in key sectors may have led investors to hold back on pouring in funds.
South Korea was the top source of foreign investment pledges in the first quarter, accounting for 44.2 percent or P12.36 billion of the total.
This was followed by the US with P3.08 billion or 11 percent share and China with P2.88 billion or 10.3 percent.
In terms of sectors, real estate attracted the biggest share of foreign investments amounting to P10.79 billion or 38.5 percent.
Manufacturing placed second with P6.14 billion or 21.9 percent, while administrative and support service activities ranked third with P5.35 billion or 19.1 percent.
By region, Central Luzon got the biggest share of foreign investment pledges in the first quarter amounting to P14.90 billion or 53.3 percent of the total.
This was followed by the National Capital Region with P6.78 billion (24.2 percent) and Calabarzon with P3.95 billion (14.1 percent).
Investments from both foreign and Filipino sources approved by IPAs dropped by 43.7 percent in the first quarter to P181.93 billion from P323.27 billion in the same period last year.
These investments are expected to create a total of 31,848 jobs, 4.7 percent lower than the expected 33,431 in the same period last year.
Of the total approved investments in the first quarter, Filipino nationals contributed 84.6 percent or P153.94 billion.
The bulk of the total approved investments by IPAs from January to March are for the electricity, gas, steam and air conditioning supply industry, amounting to P61.98 billion or 34.1 percent of the total.
For the rest of the year, Rivera said the outlook on foreign investments remains fragile.
He said a recovery may occur if global inflation stabilizes and the country would show policy continuity, provide clarity on tax reforms and address issues on ease of doing business.
“If trade frictions intensify or if regulatory risks persist, investment inflows may remain subdued. The challenge now is to restore investor confidence by fast-tracking key reforms and ensuring that investment promotion agencies are aligned in messaging and facilitation,” Rivera said.
