This week, Colliers Research provides insights on foreign direct investments to the Philippines reaching all-time high in 2021 and OFW remittances increasing for 11th straight month as more economies reopen resulting in more overseas job opportunities for Filipinos.
FDI hits all-time high $10.5B in 2021
Data from the Bangko Sentral ng Pilipinas (BSP) or the central bank showed that foreign direct investments (FDI) reached an all-time high in 2021 as inflows totaled USD10.5 billion, a 54% increase from USD6.8 billion in 2020. The growth in FDI reflects the improving investor sentiment, recovering global economy, and declining Covid-19 cases worldwide. The recently enacted Corporate Recovery and Tax Incentives for Enterprises (CREATE) law also helped raise the attractiveness of the Philippines to foreign investors through lower corporate income taxes. The manufacturing, electricity, gas, steam and air-conditioning, and financial and insurance sectors received majority of the foreign investments. Top investing countries include Singapore, Japan, the United States, and the Netherlands. The central bank projects FDI inflows to reach USD8.5 billion in 2022.
The manufacturing sector continues to be the biggest recipient of foreign investments in the Philippines. In 2021, manufacturing investments reached USD550.8 million, down 27% from USD754.0 million in 2020. In our view, this will likely support industrial park and warehouse space absorption post-Covid-19 especially in the Cavite–Laguna–Batangas (CALABA) corridor. Colliers has noted several manufacturing firms from different industries such as transportation equipment and health-related products eyeing to expand in the Philippines. Colliers recommends that industrial park operators highlight the advantages of locating within Philippine ecozones and the ease of doing business in the country. These include reforms to business-permit processing, improving infrastructure network, and reduced corporate income taxes brought about by CREATE law.
Jan. remittances up despite virus surge
Overseas Filipino workers’ (OFW) remittances increased for 11th straight month in January. Data from the BSP revealed that remittances rose by 2.5% to USD2.7 billion in January 2022 from USD2.6 billion recorded a year ago. The 10 largest sources of remittances during the month include the United States. Singapore, Japan, Saudi Arabia, the United Kingdom, the United Arab Emirates, Canada, Taiwan, Qatar, and Malaysia. Analysts are optimistic that remittances will continue to increase as more economies reopen, resulting in more job opportunities abroad.
More Filipinos are now being deployed abroad as traditional OFW destinations start to reopen. Colliers believes that remittances will continue to fuel consumer spending in the Philippines. The stable inflow of money from Filipinos working abroad should sustain consumer confidence, which should positively influence retail spending. Colliers believes that rising disposable incomes and rebound in consumer traffic in malls play a pivotal role in improving physical mall space absorption across the country. Colliers is also optimistic that remittances will continue to drive take up for affordable to mid-income residential projects with price per unit ranging from PHP1.7 million to PHP6 million.