AN economist-lawmaker is confident that the Philippines will breach its prepandemic foreign direct investments (FDI) inflows this 2022 as the country completes its three main investment liberalization reforms in the Public Service Act, Retail Trade Liberalization Act, and Foreign Investment Act amendments together with strong implementation of the Corporate Recovery and Tax Incentives for Enterprises or CREATE Law.
On Wednesday, House Committee on Ways and Means Chairman Joey Sarte Salceda said CREATE Law continues to deliver on its promise of higher foreign direct investments, as data released by the Bangko Sentral ng Pilipinas (BSP) showed FDI rising for the fifth straight month.
“This means that every month since CREATE IRR [implementing rules and regulations] was released, our FDI increased year-on-year. Data showed that FDI rose 98.9 percent year-on-year to $855 million in October from $430 million a year earlier,” he said.
Indeed, Salceda said with CREATE, even in a bad year, the Philippines is likely to match or exceed FDI levels in 2018 and 2019.
“I am also confident that we will see an even better year for FDI in 2022 as the country completes its three main investment liberalization reforms in the Public Service Act, Retail Trade Liberalization Act, and Foreign Investment Act amendments,” he added.
Earlier, the Department of Finance said the passage into law of the Foreign Investment Act, Public Service Act, and the Retail Trade Liberalization Act will lead to better wages in the country without raising the minimum wage.
“Medium to long term, the passage of the amendments to the FIA, Public Service Act, and the RTLA will help bring in more capital, generate more employment,” DOF Chief Economist Gil Beltran.
Moreover, Salceda said the BSP’s figure brings the country’s 10-month FDI to $8.1 billion, saying, “I am optimistic that we may breach, or be very close to the USD 10-billion mark, which will mean we have exceeded our prepandemic FDI inflows in 2018 and 2019, and bring us close to our 2017 FDI levels.”
“I also welcome growth in reinvested earnings, another main point of CREATE. Reinvested earnings reached $77 million, 7.1 percent higher than $72 million in October 2020…. Again, CREATE promised to end the uncertain in the country’s tax incentive regime,” he added.
According to Salceda, the lower chamber will continuously working with Department of Trade and Industry, Board of Investment, Department of Finance, and National Economic and Development Authority for the immediate release of the Strategic Investment Priorities Plan (SIPP), which is a key to exceed previous years’ FDI.
“Moving ahead, I will be working with the DTI, BOI, DOF, and Neda to release the Strategic Investment Priorities Plan [SIPP], which is the motherlode of CREATE incentives for industries. Right now, with the default IPP as the only reference for eligibility by industry, we are unable to grant the higher-tier incentives CREATE gives to high-tech or high-value investments. These are the kinds of industries that we need to invite,” he added.
SIPP is the list of sectors that are qualified for tax perks under the CREATE.