Reforms credited for July FDI rise

The rise in foreign direct investments (FDI) inflows in July was the result of confidence generated by the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, according to an economist.

The law, signed on 11 November 2024, aims to encourage investors to have domestic operations in the Philippines by providing them several incentives, such as lower corporate income tax for some activities, and lower fees and charges that will be imposed by local governments.

Data released by the Bangko Sentral ng Pilipinas (BSP) on Friday showed net FDIs reached USD1.268 billion, among the highest since the pandemic, according to Rizal Commercial Banking Corporation chief economist Michael Ricafort.

Although the latest monthly figure is 7.5 percent lower than the year-ago’s $1.37 billion, it is way higher than the $376 million last June.

Japan still top source

The BSP said 89 percent of the FDIs last July came from Japan, and were placed in wholesale and retail trade.

In the first seven months this year, net FDIs went down 20 percent to USD4.7 billion from the year-ago’s USD5.9 billion.

Ricafort, in a report, said the net inflow last July “is considered decent” since it is above USD1 billion.

“(It is) still an encouraging signal as a proxy for international investor confidence on the Philippines and still a bright spot for the Philippine economy in terms of creating more jobs and other business/economic opportunities in the local economy,” he said.

Ricafort said positive demographics, or having a large number of the population being in the working age and having one of the strongest domestic growth in the region, are pluses for the Philippines.

“CREATE MORE made it more appealing for FDIs to locate into the country and narrowing the gap on FDI incentives with neighboring ASEAN countries in attracting more FDIs,” he added.