By Chino S. Leyco
The Department of Finance (DOF) expects stronger investment flows from the United Kingdom (UK) as the government implements policy and infrastructure reforms.
In a statement, Finance Secretary Carlos G. Dominguez III expressed confidence that the economic partnership with the UK, which is among the Philippines’ 10 leading sources of foreign direct investments (FDIs), would grow in the coming years.
Dominguez noted that the British economy has been a reliable partner even when the Philippines was going through difficult challenges in the past.
“We are confident this partnership will grow even more as our economy emerges to take its place among the dynamic economies in a dynamic region,” Dominguez said in his keynote speech at the Philippine Economic Briefing (PEB) in London.
The PEB is the key event in the three-day visit of the Cabinet delegation led by Dominguez to brief British investors on the vast business opportunities in the Philippines’ infrastructure, energy and tourism sectors and to explore ways to expand economic cooperation between Manila and London.
Dominguez said he is optimistic that more investments from the UK would enter the Philippines in the coming years, “especially in the sunrise sectors of our economy.”
“These are exciting times for our economic development. We invite you to participate in building a strong and resilient economy,” Dominguez said.
Dominguez said improvements in the ease of doing business (EODB) along with other initiatives like the comprehensive tax reform program (CTRP) and an unprecedented infrastructure buildup–dubbed “Build, Build, Build”–has deepened investor confidence in the Philippines on the watch of President Duterte, leading to a 42.4 percent surge in net FDIs to $5.8 billion in the first half of 2018.
“This reflects stronger investor confidence in the Duterte administration’s decisiveness in pushing ahead with the economic reform agenda. This also dispels concerns that our tax reform is scaring away investors,” Dominguez said.
“Like the rest of the economies in the world, the Philippines is not exempted from challenges,” he added. “But what differentiates our economy from many is the decisiveness, the extent, and the pace by which we are implementing policy and infrastructure reforms. We remain one of the best-performing economies in the region and our outlook is strong.”
The Philippines also remains “on course” in accomplishing the Duterte administration’s medium-term goals, Dominguez said.
These goals are: to reduce poverty incidence from 21.6 percent in 2015 to just 14 percent by 2022, to make growth more inclusive by addressing the infrastructure deficiencies that stymie productivity, and to induce more investments to open more jobs for the next generation of Filipinos.
He said the “adept management of our fiscal affairs” has also been recognized by way of “improved credit rating outlooks as well as the tight spreads given the foreign denominated bonds we have floated in the last few months.”
“Confidence in our fiscal management is reinforced by the successful passage into law of our first tax reform package. This is the first time we are reforming our tax policies without being compelled to do so by some crisis or by creditors,” Dominguez said.
He said a new tax reform law, which is the first package of CTRP, has produced immediate results, with the country’s main revenue agencies—the Bureaus of Internal Revenue (BIR) and of Customs (BOC)–”exceeding targets significantly.”
Total revenue collection for the first eight months of this year was 19 percent higher than the same period last year. “The healthy revenue collections help us make the necessary economic investments to sustain our growth momentum long into the future,” he said.
Meanwhile, 99 percent of individual taxpayers also now enjoy reductions in their personal income tax (PIT) rates.
“Filipinos earning below $4,500 annually are now exempted from paying personal income taxes while workers earning above it now receive about a month’s extra take-home pay each year from the deductions in their tax rates. To emphasize that point, by correcting the tax rate for our average wage earners, we have basically given out a 14th month pay,” Dominguez said.
Dominguez pointed out that the most remarkable aspect of the country’s economic performance so far this year is its turn into an increasingly investment-led growth, following a 27.4-percent jump in capital formation — the most comprehensive gauge of investments — as President Duterte’s “Build, Build, Build” initiative continues to gain momentum.