Industrial developers told to tap other FDI sources

Industrial developers are urged to broaden its base of investment sources to attract sustainable, long-term, big-ticket investments that will and likely contribute to the government’s objective of generating more employment and livelihood opportunities.

According to Colliers Philippines, aside from the United States, Japan, and China, the private sector, or developers must tap other countries to expand the Foreign Direct Investments (FDIs) in the Philippines and actively join the government’s overseas promotional efforts.

The Philippine Economic Zone Authority (PEZA) is diversifying by looking for “nontraditional” sources of foreign investments. The investment promotion agency (IPA) said it is enticing Middle Eastern economies to put up clean energy facilities in the Philippines.

Colliers believes that developers with industrial parks are likely to benefit from the government’s investment decentralization thrust.

Aside from PEZA, property firms should also target other (Investment Promotions Agencies) IPAs enticing foreign locators and should be aggressive in joining investment promotion missions mounted in these nontraditional sources of investments.

More foreign manufacturing projects should result in greater absorption of industrial space and a rise in industrial land leasehold rates.

The Energy Department’s Circular No. 2022-11-0034 recently paved the way for full foreign ownership of renewable energy projects.

PEZA said the Philippines is likely to attract investors who are diversifying their manufacturing facilities and looking for alternative industrial hubs outside of mainland China.

Meanwhile, manufacturing hub status is seen as critical to Philippine investment competitiveness.

Colliers expressed confidence, however, that the government’s efforts to entice more foreign investors will likely result in more FDI inflows.

Data from the Department of Trade and Industry (DT) showed that total pledges from President Marcos’ foreign trips reached PHP4 trillion (USD72 billion) as of January 2024. These investments are expected to generate about 224,200 jobs, about a third of which will be in manufacturing, particularly in the semiconductor, electronics, and automotive sectors.

Colliers believes that this should benefit the country’s industrial sector as these projects are likely to take-up industrial space in the next 12 to 24 months. In our view, further improvement of the Philippines’ competitiveness as a manufacturing site should result in continued inflow of foreign investments, including job-generating manufacturing projects.

The DTI highlighted the need to implement structural changes to attract more foreign investments.

In a report, Trade Undersecretary Maria Blanca Kim Bernardo-Lokin said that the country needs to upskill its workforce and invest more in digitalization.

The IPAs are strengthening investment strategies and improving business registration systems in the country.

The country’s IPAs have started implementing green lanes for strategic investments which were established through Executive Order (EO) 18 which aims to ‘expedite, simplify, and automate the permit and license application processes’.