The Bangko Sentral ng Pilipinas may revise the $11-billion forecast for net foreign direct investments by the middle of this year, taking into account various factors such as the results of the incoming elections, the program of the next government and the external developments, Governor Benjamin Diokno said Wednesday.
The BSP predicted that FDI net inflows would reach $11 billion in 2022 and grow further to $11.8 billion in 2023, up from the record level of $10.5 billion in 2021.
“[We] will closely monitor the developments in the light of heightened uncertainty due to Russia’s invasion of Ukraine, and its implications on global growth and inflation,” Diokno said in a text message.
Diokno said the outcome of the May 9 national and local elections, the composition of the Cabinet of the winning candidate, “and the program of government of the incoming president would determine to a large extent FDIs into the country.”
“In other words, [we] will probably revisit our FDI forecast after June 30,” Diokno said.
Diokno said on Tuesday the amendments to the Public Service Act, together with other vital economic reforms implemented by the government, would likely boost the “soaring” inflow of foreign direct investments in the country.
He credited the efforts of the executive and legislative departments that “didn’t sit idly by and wait for the spread of the coronavirus to recede.”
“At the height of the pandemic, the President and Congress worked hand in hand to pass some game-changing legislation: the amendments to the Retail Trade Act, the Foreign Investment Act, and the Public Service Act. All these will further boost the soaring FDIs into the Philippines,” Diokno said.
President Rodrigo Duterte signed into law the bill amending the 85-year old Public Service Act. He also signed the amended Retail Trade Liberalization Act and the amended Foreign Investment Act.
The amendments to the Public Services Act would allow greater foreign ownership on telecommunication, airlines and railways.
Economic Planning Secretary Karl Kendrick Chua said the latest development would encourage more foreign investments and innovation to lower prices, improve the quality of goods and services and create more and better jobs.
Michael Ricafort, chief economist of Rizal Commercial Banking Corp., told Manila Standard the amendments to the Public Service Act, together with the Retail Trade Liberalization Act and the Foreign Investments Act, would not only help entice more foreign investments into the country, but would also align the country’s regulations with the rest of the world.
“The CREATE Law, which lowered the corporate income tax by at least -5 percentage points [from 30 percent] for large corporation retroactive July 2020 to better align with the other countries in Asia/ASEAN and provided greater certainty for investment incentives, would help attract more foreign investments, especially FDIs, into the country that entail the creation of more jobs and other business/economic opportunities, thereby would also help support and sustain economic recovery prospects from the COVID-19 pandemic,” Ricafort said in an emailed message.
Ricafort said these reform measures would also boost confidence and send a positive signal for international investors, creditors, credit rating agencies and multilateral agencies in the country.
He said the continuation of policy/reform measures should be sustained by the next administration.
The 2020 index published by the Organization for Economic Cooperation and Development showed the Philippines has some of the most restrictive foreign direct investment rules globally. The country ranked 95 out of 190 countries in the World Bank’s “Doing Business 2020” report.