Direct investment by foreigners in RP plunges 78.7%: Neda

TOTAL foreign direct investment approved by the four major investment promotion agencies in the country plunged 78.7 percent in the first nine months of 2009 to P34.3 billion from the same period in 2008, reflecting continued weakness in the global economy.

According to the National Economic and Development Authority (Neda), investments registered with the Board of Investments (BOI) plummeted 97 percent. Declines were also recorded in investments with the Subic Bay Metropolitan Area (SBMA), 66.2 percent; Clark Development Corp. (CDC), 53.2 percent; and the Philippine Economic Zone Authority (Peza), 51.9 percent.

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National Statistical Coordination Board data showed Peza approving the highest value of foreign direct investment (FDI) applications, comprising 70.5 percent or P24.2 billion of the investment pledges.

CDC and SBMA had a 12.3 percent and 9.2 percent share, respectively.

The biggest FDI commitments were from Japan, making up 22.1 percent of the total FDI applications for the nine-month period, followed by Korea, 16.6 percent, and the United States, 15.5 percent.

In terms of the combined investment commitments of foreign and Filipino nationals during the period, these fell 69.9 percent to P117.5 billion.

The commitments were expected to create 79,960 new jobs.

Pledges from Filipino investors for the first nine months of 2009 amounted to P83.2 billion or 70.8 percent of the total investments approved during the period.

To help drum up investment, Neda listed down “21st century industries” that should be included in the incoming Congress’ legislative agenda so they could be given government support.

National Planning and Policy Staff Director Dennis Arroyo said these industries were high-value agribusiness and aquaculture, renewable energy, shipbuilding, tourism, business process outsourcing, information and communications technology, and mining.

Arroyo said farmers should turn away from rice farming, which he called a “poverty trap,” and shift to high-value agriculture, like palm oil, fruits, biofuel and halal livestock.

He urged a shift toward more aquaculture, saying a Stanford study showed that more than half of the world’s fish consumption already came from the cultivation of aquatic organisms under controlled conditions.

Arroyo also encouraged investments in renewable energy projects, saying the Philippines currently ranks seventh in the number of approved Clean Development Mechanism (CDM) projects.

Most CDM projects in the Philippines involve developing indigenous energy sources, like wind, hydro and biomass, Neda said.

Under the CDM of the Kyoto Protocol, industrialized countries can earn carbon credits by investing in ventures that reduce emissions in developing countries.