The quick recovery of foreign direct investments (FDI) following the strict lockdowns signalled investors’ favorable long-term prospects for the Philippines, the Department of Finance (DOF) said.
Based on Finance Undersecretary Gil S. Beltan’s latest economic bulletin, the country’s FDIs sustained its annual growth from May to July this year, an indication that long-term prospects remain positive in the eyes of investors.
Data from the Bangko Sentral ng Pilipinas (BSP) showed that FDIs grew for three consecutive months with 39.1 percent in May, 7.1 percent in June and 35.1 percent in July.
The BSP attributed the steady climb on investors’ improving sentiment amid easing of containment measures, and some signs of gradual improvements in economic activity in the country.
Likewise, FDI inflows improved month-on-month by 28 percent in May, 19.6 percent in June and 65 percent in July.
“Strict quarantine measures implemented in the final weeks of the first quarter may have [only] put FDI inflows temporarily on hold… long-term prospects remain positive,” Beltran said in a report submitted to Finance Secretary Carlos G. Dominguez III.
However, the total FDIs of $3.80 billion in January to July remained 11 percent lower compared with $4.26 billion in the same period last year.
Year-on-year decreases were in reinvestment of earnings and net debt instruments of 20.9 percent and 27.1 percent respectively, which mitigated the 111.1 percent growth in net equity capital investments for the period.
“Moving forward, sustaining investment-incentivizing activities such as making doing business easier and continuing to invest in infrastructure will be key to attracting more investment into the country,” Beltran said.
The finance official also reiterated the need to pass the much-needed legislative reforms being initiated by the DOF to fuel and encourage more foreign investments.
These measures are the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) bill, Financial Institutions Strategic Transfer (FIST) bill, and Passive Income and Financial Intermediary Taxation Act (PIFITA).
Amendments to the Commonwealth-era Public Service Act and the Retail Trade Liberalization Act are likewise important to entice investors, which in turn, will expand consumer choices and the pool of employers, Beltran said.