Investments up 18.6%, beat target in 2006

Vol. XX, No. 125
Monday, January 22, 2007 | MANILA, PHILIPPINES

The Economy

Investments in the Philippines grew 18.615% in 2006 to P274 billion, exceeding the expectations of the Board of Investments (BoI) and of the Philippine Economic Zone Authority (PEZA), the Trade department said in a statement at the weekend.

The statement quoted Trade Secretary Peter B. Favila as saying that both agencies reported P20 billion more than their combined target of P254 billion. In 2005, investments BoI and PEZA reported reached P231 billion.

BoI approved a total of 231 projects worth P190 billion, or a 16.564% increase from the P163 billion in 2005. On the other hand, PEZA approved a total of 463 projects worth P84 billion, a 25.373% increase from the P67 billion in 2005.

New and expansion projects in 2006 generated 135,069 jobs, 14 % more than in 2005.

"The surge in investments is a reflection of the investors’ confidence, brought about by improved fiscal position of the country and the enhanced business environment. We are committed to pursue policy reforms to improve further our competitiveness in the global market," Mr. Favila said.

He added that the Trade department, where businesses register and which processes applications for incentives, will continue to adopt reforms to reduce business transactions costs.

Mr. Favila recently raised the investment growth target this year to 12% from the original 10%, the target adopted by the department in the last three years.

Trade officials have particularly cited four fields as driving growth in investments this year, namely, infrastructure, mining, information and communications technology (ICT, which the statement said covers software development and business process outsourcing, or BPO), as well as medical tourism.

"We are optimistic that our remarkable investment performance in 2006 will be sustained in 2007, as inflow of capital in the infrastructure, mining, ICT, tourism and health and wellness sectors will come in.

The international business community has recognized the country’s fiscal consolidation efforts, thus, [improving prospects for] upgrading our credit rating," the same statement quoted Trade Undersecretary and BoI Managing Head Elmer C. Hernandez as saying.

Mr. Hernandez noted that investments in infrastructure registered a huge increase over same period in 2005; real estate grew 13%; agriculture, 541%; and information technology services, 78%.

Furthermore, local investors appear upbeat, Mr. Hernandez said. In 2006, they accounted for 67% of total investments at P182 billion, while foreign investors accounted for P92 billion.

ICT investments last year rose 79% to P16 billion from P8.8 billion in 2005. The new 170 projects, mostly engaged in software development and BPO, are expected to generate 51,562 jobs once they are fully operational. "Our ICT sector is considered one of the fastest-growing sectors in Asia, providing 300,000 employment [sic] since 2000 and supporting the Medium Term Development Plan of creating jobs. The growth of BPO, one of ICT’s subsectors, is fueled by the desire of multinational firms to cut on internal costs. ICT will remain one of the drivers of our economy in 2007," Mr. Favila said.

Investments in infrastructure sector account for 45% of total investments at P124 billion, while investments in the manufacturing and services sectors accounted for 44% at P122 billion. Mr. Hernandez said these sectors accounted for 90% of new jobs generated.

The BoI managing head said his office expects even more investments in public works this year, as the government has announced that it intends to develop the country’s "mega-regions," which are hubs for growth. — KLA

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