The rise of foreign direct investments (FDIs) in the country in April 2021 is due to the implementation of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law and the opening of the economy, an economist said.
Net FDI inflows jumped 114.4 percent year-onyear to $679 million last April from $317 million in the same period last year tThe Bangko Sentral ng Pilipinas (BSP) earlier said.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said lower interest rates and lower cost of some inputs like real estate property and leases are plus factors that enticed higher FDIs.
“Some foreign investors may have started to come in view of the progress made on the CREATE law, which was finally signed on March 26, 2021 and reduces corporate income tax rates to 25 percent for large corporations (from 30 percent) retroactive July 1, 2020, thereby narrowing the gap with the tax rates in other Asean/Asian countries, and also provides greater certainty on investment incentives, thereby helping attract more FDIs and making some foreign investors on the sidelines in recent months/years to become more decisive and finally bring in more FDIs into the country,” he said.
Ricafort said positive credit rating actions on the Philippines, which even got its first-ever A-level credit rating, A-, from the Japan Credit Rating Agency (JCR) in June 2020, also boosted investors’ sentiment on the domestic economy.
The positive credit rating actions, he said, “reflect improved international investor confidence in the country, manifesting the country’s improved economic fundamentals, as well as the country’s attractive demographics.”