Net FDI to pick up in 2nd half – Diokno
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Thu, 03 Oct 2019 16:22:52 +0000
Net foreign direct investments (FDI) in the country are expected to pick up in the second semester of the year, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said.
In an interview, Diokno told reporters that the central bank was “optimistic [net FDI would reach] $8 billion or $9 billion for the year.”
His remarks came weeks after the BSP reported that net FDI in the first half reached $3.57 billion, down 38.8 percent from the amount recorded in the same period in 2018 — far from its downwardly revised $9-billion net inflow target this year.
Asked for comment on the lower first-half net FDI, Diokno said it could be attributed to the second tax reform proposal of the government and the mid-term elections earlier in the year.
“Maybe the FDI [inflows] slowed down because of [the] uncertainty [over] how the second package looks like and…because of the elections,” he said. “Usually, investors were in [on a] wait-and-see mode.”
Under the proposed second package of the Duterte administration’s Comprehensive Tax Reform Program — House Bill 4157, or the “Corporate Income Tax and Incentive Reform Act” (Citira) — the government would modernize the fiscal incentive system to establish a single menu of superior incentives that are performance-based, targeted, time-bound and fully transparent.
Also under the measure, the corporate income tax rate would be gradually reduced from 30 percent to 20 percent in 10 years.
Further details from the central bank’s latest net FDI report showed that equity capital investments declined to $361 million from $1.58 billion from January to June.
Placements dipped by 50.8 percent to $860 million, while withdrawals increased by 206.6 percent to $499 million.
Equity capital infusions in the period came mainly from Japan, the United States, Singapore, China and South Korea. These were channeled largely to financial and insurance, real estate, manufacturing, transportation and storage, administrative and support service.
Intercompany borrowings also fell by 28.8 percent to $2.70 billion from $3.80 billion in the same period in 2018.
On the other hand, reinvested earnings jumped by 12.1 percent to $507 million in the first six months of the year from $453 million in the same period last year.
Asked to comment on Diokno’s remarks, Philippine Economic Zone Authority (PEZA) Director General Charito Plaza — who has voiced opposition to the incentive rationalization portion in Citira — said on Thursday that net
FDI “would pick up if PEZA’s incentives to export-oriented industries would” remain untouched.
WITH ANNA LEAH E. GONZALES