Philippines ramping up efforts to lure more foreign investors

MANILA, Philippines — The Philippines is ramping up efforts to attract more foreign investors to take advantage of the impending recovery from the pandemic-induced recession, according to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno.

Diokno told participants of the virtual 2nd Philippines-Singapore Business and Investment Summit on Friday the impact of COVID-19 pandemic on the economy is only transitory amid the reform momentum that provided favorable medium-term growth prospects for the Philippines.

“For the Philippines, we entered the crisis in a position of strength. We were armed with strong macroeconomic fundamentals, which were a result of over 20 years of structural reforms,” Diokno said.

With ample monetary and fiscal space, Diokno said crisis response measures were implemented swiftly and decisively by the monetary authorities, unleashing P2 trillion of liquidity into the financial system.

The BSP, together with the national government, implemented crucial measures including the reduction of interest rates by 200 basis points and the lowering of the reserve requirement ratios for banks to mitigate the impact of the pandemic on livelihoods and the economy.

“The reform momentum will help fuel the Philippines’ recovery, address structural issues, and continue to enhance the Philippines’ competitiveness as a leading investment destination. You are welcome to do business with us and be part of our exciting post-COVID narrative,” Diokno said.

The BSP contributes to the Philippines’ reform momentum in part through its efforts toward financial digitalization – punctuated by the Digital Payments Transformation Roadmap launched in October 2020 – and its push for vital legislative measures.

The latter includes proposed laws that will lift secrecy of bank deposit; allow banks to expand credit activities that comply with the mandated lending for agriculture development; create a credit risk database for micro, small, and medium enterprises (MSMEs); improve the protection of financial consumers and strengthen the capacity of government financial institutions to assist MSMEs and other strategically important enterprises, among others.

‘’While countries are preoccupied with the rollout of COVID-19 vaccine programs and recovery efforts, I am pretty sure many investors are in search of business opportunities and destinations that will provide great value for shareholders over the long haul.The Philippines is a smart investment destination,” the BSP chief said.

The BSP also supports the economic agencies of government in pushing for laws that will help open the gates to more foreign direct investments (FDIs), particularly including amendments to Foreign Investment Act, Public Service Act, and Retail trade Liberalization Law.

The biggest stimulus for businesses is Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act which slashes the income tax slapped on businesses to 25 percent from 30 percent.

Under the Build Build Build program, Diokno said the government has allocated a record P1.17 trillion for infrastructure projects this year.

The BSP sees FDIs rising steadily to $7.8 billion this year and $8.8 billion next year after slumping to $6.5 billion last year, while foreign portfolio investments or hot money is expected to increase to $5.7 billion in 2021 and $7.4 billion in 2022 from $5.3 billion in 2019.