I. The Introduction
The Foreign Investments Information System (FIIS) was started in 1991 as a project 1 to develop an integrated approach for generating and reporting foreign direct investments (FDI) in the Philippines.
Starting with the Third Quarter 2012 Report, foreign investments approved and registered by the investment promotion agencies (IPAs) is termed “approved foreign investments”, replacing the term “approved foreign direct investments” used in the previous reports. This is to distinguish clearly, the approved foreign investments which are only commitments and pledges from the Foreign Direct Investments (FDI), which are actual investments being released in the Balance of Payments (BOP) by the Bangko Sentral ng Pilipinas (BSP).
The Philippine Statistics Authority (PSA) is the agency tasked to compile the statistics on Foreign Investments (FI). This started in 2014 as stipulated under Republic Act No. 10625 or the Philippine Statistical Act of 2013.
(1) Organisation for Economic Co-Operation and Development. (2001). Measuring Productivity. Measurement of Aggregate and Industry-Level Productivity Growth.
(2) Organisation for Economic Co-Operation and Development. (2008). Benchmark Definition of Foreign Direct Investment.
(3) International Monetary Fund. (2009). Balance of Payment and International Investment Position Manual Sixth Edition (BPM6).
II. The Foreign Investments Information System
II.1. Statistics on Foreign Investments (FIs)
Statistics on FDIs are being reported/generated by a number of agencies that carry out functions relating to management and monitoring of and/or promotion for attracting foreign investments in the country, which has often resulted in inconsistent data generation and interpretation because of differences in concepts, definitions and reporting periods adopted by the concerned agencies.
With the objective of resolving this problem and other issues in the generation and reporting of foreign investment statistics, the National Statistical Coordination Board (NSCB) created an ad hoc Inter-Agency Group (IAG) in 1991 to conduct a study for the implementation of the FIIS.
The IAG published its First Report of the FIIS Study in July 1996 based on available annual administrative data for 1991 and 1992. The report also recommended a system that will operationalize the concepts and methodologies for developing and compiling foreign direct investment statistics in the Philippines context. The report featured the results of the 1991-1992 estimates of stock of FDI, and the concepts, methodology, data system and institutional support needed to implement the FIIS.
Based on the recommendation in the FIIS Study, the NSCB created the Inter-Agency Committee on Foreign Direct Investments Statistics (IAC-FDIS) in September 1996 through NSCB Memorandum Order No. 1-96 to rationalize and integrate foreign investments data in all aspects including collection, processing and dissemination. The IAC-FDIS was composed of:
|National Statistical Coordination Board||Chair|
|Board of Investments (BOI)||Co-Chair|
|Bangko Sentral ng Pilipinas (BSP)||Member|
|Bureau of Trade Regulation & Consumer Protection (BTRCP)||Member|
|Clark Development Corporation (CDC)||Member|
|National Economic and Development Authority (NEDA)||Member|
|National Statistics Office (NSO).||Member|
|Philippine Economic Zone Authority (PEZA)||Member|
|Securities and Exchange Commission (SEC)||Member|
|Subic Bay Metropolitan Authority (SBMA)||Member|
The member agencies of the IAC-FDIS jointly implement the institutionalization of the FIIS. The IAC-FDIS implemented the second component of the FIIS, the Consolidated Quarterly Reporting System (CQRS), which has been producing the quarterly Reports on Foreign Direct Investments in the Philippines since 1997. The CQRS operationalizes the integration and uniform reporting of quarterly data on foreign investment reported by the various concerned agencies.
The other two components of the FIIS are the Registry of Firms on Foreign Investments and the Annual Reporting System. These three components will later be integrated to complete the FIIS.
II.2. Data and Data Sources
- The PSA as the agency that coordinates all statistical matters in government has been tasked by the Interagency Committee on Investment Statistics (IACIS) with the preparation of the CQRS. The CQRS covers actual and approved foreign direct investments.
- The IPAs generate data on foreign investments monthly. These agencies show “project cost” in reflecting approved or committed investments. For purposes of the CQRS, the term approved investments is adopted. Not all of approved investments will materialize during the period. There is a gestation period between approval and actual investments.
- To arrive at total approved investments, the reported project costs of BOI, PEZA, SBMA, CDC, AFAB, BOI-BARMM, and CEZA are summed up for the quarter.
- Total balance of payments foreign direct investments are obtained from BOP tables compiled monthly by the BSP. The BOP provides the data framework on all external transactions of the national economy, in which FDI is one item. Conceptually, the FDI flows in the BOP are consistent with the IMF definition. Hence, these are taken as the global total of foreign investments inflow on a quarterly basis.
- The Securities and Exchange Commission (SEC) and the Bureau of Trade Regulation and Consumer Protection (BTRCP) of the Department of Trade and Industry (DTI) also report monthly foreign capital investments. SEC comes up with data on investments and number of non-Foreign Investments Act (FIA) registered FDI corporations (foreign ownership is less than 40 percent) and FIA-registered corporations (40 percent and over foreign ownership), by country of investor and by industry. In SEC, foreign investments refer to the foreign equity (paid-up) capital of the non-FIA and FIA registered corporations. It should be noted, however, that registration with SEC and BTRCP does not translate into actual flows as captured by the BOP of BSP.
- Hence, what are not reported at present are additional investments of existing FDI enterprises. SEC covers only that portion of existing FDI enterprises that apply for additional authorized capitalization.
- The International Operations Department (IOD) of the BSP registers foreign direct investments in cash or in kind in any enterprise organized or existing under the laws of the Philippines. Registration of foreign investments with BSP is not mandatory but it gives foreign investors the authority to source foreign exchange from the local banking system to service capital repatriation and cash dividends/profits and other earnings accruing to BSP-registered investments. As there is currently no mandatory period within which to register these investments, there is a time lag between the registration with the BSP and the inflow of the investment funds or in the case of investment in kind, the receipt by investee firm of said investment. In some cases, this time lag could be a year or longer.
- Total approved investments include all Filipino and foreign investments which has been granted approval by the promotion agencies, i.e., BOI, PEZA, CDC, SBMA, AFAB, BOI-BARMM, and CEZA.
IV. Concepts and Definition of Terms
On the other hand, the BOP FDIs cover cash and non-cash transactions on foreign direct investment flows that are coursed through the banking system. Machinery, equipment and reinvested earnings, which are not cash transactions are included if data are available.
V. Dissemination of Results
The Approved Foreign Investments is released quarterly in the PSA website with the following schedules.
|Foreign Investments Report||Schedule of Release|
|Quarter 4 of the Previous Year||February of the Current Year|
|Quarter 1 of the Current Year||June of the Current Year|
|Quarter 2 of the Current Year||September of the Current Year|
|Quarter 3 of the Current Year||December of the Current Year|
The web release materials include press release, statistical tables, infographics, publication report and social cards.
Philippine Statistics Authority. (2020). Technical Notes on Approved Foreign Investments. https://psa.gov.ph/technical-notes/afi
VII. Contact Information
Mr. Gerald Junne L. Clariño
Chief Statistical Specialist
Satellite Accounts Division
1Initial funding came from cooperating agencies, i.e., NSCB, BOI, BSP, SEC and BTRCP. USAID funded the project starting in 1993.