Tax reform, infra spending seen to lure investors

MANILA, Philippines - BDO Nomura Securities Inc., the joint venture between BDO Unibank and Nomura Holdings of Japan, said the proposed tax reform package and government’s accelerated infrastructure would make the country a more attractive investment destination.

“If those catalysts happen, I think the Philippines will be more attractive as an investment destination, both for local and foreign investors. You will see investments go up if the reforms will happen,”  BDO Nomura senior vice president and head of research Dante Tinga said.

BDO Nomura is bullish on the equities market given a strong local economy.

“We forecast a GDP growth of 6.7 percent/6.8 percent in 2017-2018 versus the consensus at 6.4/6.3 percent,” BDO Nomura said.

It added the Philippines could witness an investment boom in the future, amid the country’s healhy fiscal position and young population.

“The underlying long-term theme of a resilient Philippine economic growth remains intact despite headwinds from rising rates, peso weakness and geopolitical uncertainties,” BDO Nomura said.

“We’re just saying that investors have a wait and see approach on those two reforms. They’ll act when it’s already there,” Tinga said.

The company official emphasized that among the reasons that makes the Philippines a less competitive destination is the high corporate tax.

“If those are brought down, which I think are part of the package, we should see an increase in foreign investors,” Tinga said.

Also, he identified the country’s poor quality of infrastructure as another factor dragging the Philippines’ competitiveness.

“So if the quality of infrastructure improves, we will become more competitive. That’s why if these things happen, there will be upside from investors,” Tinga said.

He added that Philippine stocks could see an upward re-rating if the government successfully executes the tax reform and accelerated infra spending.

Despite his optimistic sentiment on the equities market, Tinga expressed some concern over the profit outlook of some of the large-capitalized securities covering consumer, telecoms and utilities.

BDO Nomura has been offering online stock trading services since October last year.

Since it’s launch, more than 15,000 accounts have been opened through its online trading platform as of the end  of June 2017.

Retail investors remained the key market for online accounts, making up 99.7 percent of total online accounts.