Once signed by President Rodrigo Duterte, the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act is seen to have the biggest impact in the road to economic recovery for the Philippines this year.
The Board of Investments (BoI), in a recent webinar, said this is expected especially in the construction and infrastructure sectors.
Lanie Dormiendo, BoI Officer-in-Charge for International Investment Promotion Lanie, backed the pronouncement of Trade Secretary and BoI Chair Ramon Lopez, saying that the CREATE Act will unleash the growth potential of investments.
Estimates point to bringing in an additional P200 billion in new investments that can generate up to two million new jobs.
“The CREATE Act, once signed by the President after being ratified by Congress, is expected to boost the market and investors’ confidence through the rationalization of incentives to respond to the changing needs of businesses. The government will continue to implement strategic policy reforms and propose similar measures to make it easier to do business and encourage the flow of more foreign direct investments (FDI) into the country,” Dormiendo said.
The CREATE Act lowers the Philippines’ corporate income tax (CIT) rate from 30 percent to 25 percent and modernizes the country’s investment incentives, making them more competitive and transparent, time-bound, targeted, and performance-based.
It also supports businesses with economic stimulus measures that will help them recover from the coronavirus pandemic.
Congress recently ratified the measure and is now with Philippine President Rodrigo Duterte for approval.
The BoI, in a report, said that despite the world health crisis, the country’s FDI remained steadfast for 2020 as preliminary estimates of the United Nation Conference on Trade and Development (UNCTAD) showed a 29 percent increase in foreign investments to $6.4 billion from $5 billion in 2019, in stark contrast with the decline of global FDI.
The Philippines is among the very few countries which experienced an increase in FDI.
Dormiendo pointed out that the Agency was able to achieve its P1 trillion ($19 billion) target in project approvals with a total of approved investments of $20.55 billion (P1.02 trillion) for 2020.
While this was slightly lower than the record figure in 2019 (P1.14 trillion), it is still the second-highest level of project approvals in BoI’s history considering the restraints brought about by the pandemic.
Secretary Lopez announced a $25.19 billion (P1.25 trillion) project approval target for the agency this year.
BoI figures for 2020 show that construction/infrastructure is the sector with the highest approved investments (P557.3 billion or 56percent), followed by electricity, gas, steam, and air conditioning supply (P199.2 billion or 20 percent), transportation, and storage (P161.6 billion or 16 percent), real estate (P32.54 billion or 3.3 percent), and the water supply, sewerage, waste management, and remediation (P27 billion or 2.7 percent).
These projects once fully operational are expected to power the country towards economic recovery for 2021 and beyond.