Japan tops PEZA investor; pours in P716B since 1995

Published May 18, 2021, 1:55 PM

by Bernie Cahiles-Magkilat

A total of 16 Japanese firms have registered their projects worth P1.8 billion with the Philippine Economic Zone Authority (PEZA) for the period January 2020-April 2021, bringing total Japanese investments in the country’s economic zones to P716.22 billion from 1995 up to the present.

PEZA Deputy Director General Tereso Panga said the 16 Japanese projects are expected to generate 1,142 jobs for manufacturing (7 firms), IT (4), and logistics (3).

As expected, Panga said the Japanese came in strong with their new and expansion projects under PEZA. “Japan has always been the number one ‘Ichi-ban’ foreign investor in PEZA,” Panga noted.

From 1995 up to April 2021, there are now 974 Japanese locators in the various ecozones administered by PEZA. These firms have poured in P716.22 billion or 27 percent of total P2.63 trillion in ecozone investments approved by PEZA 1995 up to the present, said Panga.

“Given the current 27 percent share and steady increase of Japanese ecozone investments even amid pandemic, we remain bullish that the Japanese will continue to be our no. 1 investor in PEZA not only this year but for many years to come,” he said.

He said Japanese foreign direct investment (FDI) inflows into the country can be boosted further with the Philippines tapping more into Philippines-Japan Economic Partnership Agreement for improved market access to Japan, and with the Japanese government encouraging their local SMEs as well as large export manufacturing economies in China to relocate in the Philippines.

Also booting FDI inflows is the consolidated investment promotion of the IPAs through the Department of Trade and Industry’s REBUILD: ‘Revitalizing Businesses, Investments, Livelihoods, and Domestic Demand’ is also a good strategy to attract Japanese and other FDI sources as it aims to jumpstart and reinvigorate the economy by revitalizing consumption and enhancing production capacity.

Last year, despite the continuing community quarantine restrictions, ecozone foreign investments went up by 21.26 percent to P59.73 billion ($1.19 billion) from P49.26 billion ($0.98 million) in 2019.

However, there has been a decline in local investments (mostly in ecozone developer projects) from P68.29 billion in 2019 to P35.30 billion in 2020.

Foreign investments under PEZA alone accounted for at least 18 percent of the country’s total FDI inflows of $6.5 billion in 2020.

Panga quoted economists in saying that FDI contributes significantly to the GDP growth. “When foreign investors bring over their capital to put up a business in the Philippines, the job market grows and so does the standard of living in the country,” he said.

Majority of PEZA-registered foreign investors are engaged in ICT, manufacturing and real estate activities.

Panga expects the same the trend in national FDI inflows as PEZA continued to approve ecozone developers and locator projects.

The Philippines was also cited by the UNCTAD’s World Investment Report 2020 for a surprising 29 percent increase in FDI inflows at the height of the pandemic while the rest of southeast Asia contracted by 31 percent.

The increase in FDI inflows to the Philippines can be attributed to Japan, the United States and Singapore, the country’s main investors particularly in the manufacturing and real estate sectors. Prior to the COVID pandemic in 2019, Singapore was the largest investor in the Philippines followed by China and South Korea. The main sectors for these FDIs are ICT, manufacturing, energy and utilities.