By Bernie Cahiles-Magkilat
The Board of Investments (BOI) has expressed confidence of hitting the P1-trillion investment target this year even if the January-June’s P304-billion approved registration is still 70 percent off its target saying inflows in the second half will be driven by big ticket infra projects from the government’s massive infrastructure build-up.
BOI data showed that approved committed investments from January-June this year steadily increased reaching P304 billion. While the approved projects reflect a commendable 27 percent increase year-on-year, the first semester figure was only 30 percent of the P1-trillion investment target set by the government’s premier investment generating agency for this year. This means the BOI is still 70 percent off its target.
“There are lots of big infra projects in the pipeline,” said BOI Chairman Ramon M. Lopez confident of hitting the target. He said infrastructure projects should boost the achievement of P1-trillion target. Lopez did not identify these infra projects but some of the government’s flagship projects such as the Manila subway, expressways, and mass rail transit extensions have already broken ground.
Other projects in the pipeline include manufacturing, energy and power, he said. Lopez also revealed he is going to China end this month to meet with three big Chinese firms to press on their timetable for the implementation of their huge projects in the country.
One of these Chinese projects is the $4.4-billion integrated steel project of HBIS Group, China’s second-biggest steelmaker. HBIS signed a letter of intent with the BOI in December last year to invest for the Philippines first integrated steel complex that will eventually produce 8 million tons of steel per year in a planned site in Mindanao.
Besides HBIS, private equity firm Huili Investment Fund, Philippine rebar producer Steel Asia Manufacturing Corp and the state-owned Phividec Industrial Authority were also signatories to the memorandum.
The facilities in the complex will include sintering, coking, pelletizing and steel-rolling, according to the Philippine statement, producing basic iron and steel products for further processing.
BOI Managing Head Ceferino S. Rodolfo also supported Lopez’s confidence stressing, “Year-on-year, investments are still increasing. We are confident of surpassing our target at the end of the year. There are big ticket projects in the pipeline, but we are exercising – as we do in all cases – prudence in diligently assessing their eligibility for incentives.”
Rodolfo said that based on the guidelines, projects for the improvement of the country’s telecommunications infrastructure can be registered with the BOI.
Lopez also noted that foreign investments have grown three digits, faster than the domestic equity. Chinese investments, he said, are expected to make a marked contribution in the foreign equity investments level. Foreign equity investments in BOI-approved projects now account for 20-30 percent although the domestic equity contribution is expected to continue grabbing the bulk of investments inflow.
“China is a big player now. They used to be quiet, but they are a big factor now,” he said. Other sources of foreign equity include Japan, EU and Japan.
Of the approved investment pledges in the first semester this year, foreign equity contribution hit P68.9 billion in the same period, a 375.3 percent jump from January to June 2018. Domestic investments continued to roll with P235.6 billion in the first half, posting a 5 percent growth vis-à-vis the first six (6) months of last year.
Among foreign investors, Singapore retains its position as the country’s largest foreign investor with P35.4 billion. Netherlands is second with P9.2 billion, with Thailand occupying third with P8.5 billion. Japan (P5.8 billion) and the United States (P2.4 billion) round up the five biggest foreign investors.
Power projects in the first half cornered the lion’s share of the total investments with P192.4 billion, a 77.9 percent hike from last year’s P108.2 billion. The resurgence of the manufacturing sector continues with P45.3 billion to date, a 128.4 percent increase from P19.8 billion in January to June 2018. The information and communication sector posted a 9,680 percent upsurge to P33.2 billion from just P340 million last year. Tourism accommodation steamrolled to P8.6 billion, up 591 percent from P1.2 billion last year.
Countryside development continues to be in full swing with 96 percent of investments spread to other regions other than the National Capital Region (NCR). Region IVA – Calabarzon continues to be the number one investment location with P201.2 billion and followed by Region III- Central Luzon (P27.7 billion). NCR placed third (P11.3 billion), accounting for just 4 percent of the total figure. The rest of the top five are Region VII – Cagayan Valley (P8.7 billion) and Region VII – Central Visayas (P7.7 billion).
Rodolfo said among the latest approvals are the P4 billion 19.7 megawatt (MW) hydropower project of Rio Norte Hydropower Corp. in Isabela, the P4.7 billion acquisition of the newest models of Airbus planes by Cebu Air., Inc. and the P2.3 billion 15 MW thermal power plant of DMCI Masbate Power Corp. in Masbate.