Hazy economic outlook sinks FDI pledges in Q1

Foreign direct investment pledges in the country’s economic zones continued to contract in the first quarter of the year, as lingering uncertainties brought by the pandemic continue to spook investors.

The government approved a total of 19.6 billion pesos in FDI pledges from January to March, down 33 percent year-on-year, the Philippine Statistics Authority reported Thursday.

The data was the lowest recorded since the first quarter of 2018 when FDI pledges amounted only to 14.2 billion pesos.

FDI pledges are bets placed on the country’s ecozones, whose key attraction are tax holidays and other perks. While these commitments may or may not translate to actual inflows in the future, they serve as vital gauge of sentiment especially since investment decisions on this front are greatly affected by tax perks offered them.

They are also different from the central bank’s own measure of FDI inflows, which is on a net basis.

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