FOREIGN direct investment (FDI) is on track to exceed 2019 levels this year, with investors drawn in by reforms that have made the Philippines a more attractive investment destination, the Department of Finance (DoF) said.
“FDI levels are seen to be on track to exceed pre-pandemic levels. In order to further expand this promising growth story, we have carefully designed strategic initiatives that maintain a fiscal sector that is supportive of this goal,” Finance Assistant Secretary Neil Adrian S. Cabiles said at the BusinessWorld Insights: Stock Market Outlook 2025 conference.
In the first 11 months of 2024, FDI net inflows rose 4.4% to $8.58 billion, the DoF said, accounting for 95.3% of the BSP’s full-year forecast of $9 billion.
In 2019, the last year before the pandemic, FDI net inflows amounted to $8.671 billion.
In November, FDI net inflows fell 19.8% year on year to $901 million.
Mr. Cabiles said reforms like the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act will improve ease of doing business, upgrade the tax code, and clarify the value-added tax refund rules.
“This would mean streamlined compliance, reducing the administrative burdens and making transactions more efficient. CREATE MORE also enhances tax incentive competitiveness and strengthens governance and accountability in the granting and monitoring of these tax incentives, creating greater transparency and a more predictable investment environment. We expect that the CREATE MORE will particularly draw investments in infrastructure, heavy industry, the export-oriented manufacturing sector, and services,” he said.
The Real Property Evaluation and Assessment Reform Act and the rationalization of the mining fiscal regime will also enhance transparency and accountability in the real estate and mining industries, respectively, he added.
The passage of the Capital Markets Efficiency Promotion Act is also expected to boost FDI net inflows by increasing the competitiveness of the capital markets.
“We anticipate greater financial market activity through streamlined taxes on passive income and reduced taxes on stock transactions and financial intermediaries,” Mr. Cabiles said.
The Philippines’ recent exit from the Financial Action Task Force’s (FATF) grey list also improves its’ profile and could boost its credit rating.
The FATF on Friday removed the Philippines from the category of jurisdictions requiring increased monitoring for “dirty money” on Friday following a “successful” on-site visit. The Philippines had been on the list since June 2021. — Aaron Michael C. Sy
