Investment pledges more than double

MANILA, Philippines — The pipeline of projects approved by the Board of Investments (BOI) – the country’s main investment promotion agency – more than doubled in the first eight months, strengthening government’s claim that investors are not spooked by a proposed law which seeks to rationalize fiscal incentives.

Investments registered with the BOI surged 126 percent to P609.04 billion from P269.3 billion in the same period last year, with projects in the information and communication sector as the main driver amid the ongoing digital transformation.

The ICT sector accounted for the biggest share of investments during the period with P308.8 billion, well above the P340 million it generated a year ago.

Power projects, which previously had the lion’s share of investments, took the second spot with P195.1 billion as of end-August, a 50.5 percent increase from P129.6 billion in the same period last year.

In terms of sources of investments, domestic firms continued to account for the bulk at P404.5 billion as of end-August, up 61.2 percent from P251 billion last year.

Approved foreign investments, meanwhile, surged to P204.5 billion as of end-August from just P18.3 billion in the same period in 2018.

Finance Undersecretary Karl Kendrick Chua said the increase in investments committed by foreign companies shows that the investors continue to have confidence in the Philippines, and that fears of investment flight due to the expected passage of the Corporate Income Tax and Incentives Rationalization Act (CITIRA) are unfounded.

“It goes to show that the noisy naysayers against the long-due efforts to reform the country’s convoluted corporate income tax (CIT) system are mistaken,” Chua said.

Singapore continued to top foreign sources of investments with P170 billion in the January to August period.

Netherlands placed second with P9.2 billion, followed by Thailand at third place with P8.6 billion, Japan fourth with P6 billion, and the US fifth with P2.4 billion.

Sought for comment, ING Bank senior economist Nicholas Mapa said the latest numbers on foreign investment pledges may point to continued confidence in the prospects of the Philippine economy, with or without the implementation of CITIRA.

“Still one of the fastest growth centers and boasting a young and skilled working population, growth potential in the Philippines remains a cut above most of our peers,” Mapa said in an email.

“There was a noticeable deceleration, however, in both debt instruments (loans from headquarters) and fresh equity (so-called fresh FDI) in 2019, perhaps showing that although some investors remain upbeat over the Philippines, others may want to see the final version of the CITIRA law before deciding how to proceed on their planned investment,” Mapa said.

He said the reinvestment of earnings continued to expand, “demonstrating the faith of corporations who have already located onshore as they vote with their money, choosing to plow back profits into Philippine operations.”

For the month of August alone, investments approved by the BOI grew 1,640.9 percent to P296.2 billion from just P17 billion last year.

“The August figure of investment approvals nearly matches investments approved for the first seven months of 2019, amounting to P312.8 billion. This shows big-ticket projects have begun to roll in and proves that the Philippine economy remains resilient in attracting investors despite the global slowdown,” Trade Secretary and BOI chairman Ramon Lopez said.

Notable projects which secured approval from the BOI in August include the P141.1 billion infrastructure project of ISOC Asia Telecom Towers Inc. to build 25,000 cellular towers; the P134.5 billion project of Philippine Fiber Optic Cable Network Ltd. Inc.; and the P16.7 billion cement facility of Republic Cement and Building Materials Inc. in Rizal.

Given the latest approved investments, Trade Undersecretary and BOI managing head Ceferino Rodolfo said the agency remains on track to meet the P1 trillion target this year.

“We still have pending big-ticket projects that need to be thoroughly studied and evaluated. With four months remaining, we have to ensure that those who got the nod are deserving of the tax incentives and translate to more job opportunities for our countrymen,” he said. – With Mary Grace Padin