Despite the upcoming national elections, investment pledges approved by the Board of Investments (BOI) still rose by 13 percent to nearly P62 billion in the first quarter, demonstrating the continued strong investor confidence in the Philippine economy.
Previous election periods have traditionally shown a decline in investment approvals as most investors would usually adopt a wait-and-see stance until after the elections, Trade Undersecretary Ceferino S. Rodolfo said in a press briefing Monday.
Data from the BOI showed that the investment commitments would be poured in 73 projects that were expected to create close to 13,000 new jobs once fully operational.
The increase in investment pledges can be attributed to the big-ticket energy-related projects, which accounted for the biggest share at P29.34 billion or 47 percent of the total approved investments for the first three months of the year.
Investments in real estate projects, particularly the economic and low-cost housing, also grew by 97 percent to P17.87 billion in the same period this year. These real estate investment projects accounted for 29 percent of the total approved investments in the period.
Other projects approved by the BOI in the first quarter of 2016 came from transportation and storage with P9.22 billion (15 percent), manufacturing with P4.78 billion (8 percent) and accommodation and food services activities with P350.69 million (1 percent).
Rodolfo stressed the need to continue providing incentives for investors as this was the top factor being considered by many companies, particularly from abroad, in their decision to locate here.
Given the high cost of doing business in the country, fiscal incentives are applied to compensate or offset obstacles in the business environment such as complex regulations, high cost of power, logistics, transport and smuggling.
An earlier study conducted by state think tank Philippine Institute for Development Studies showed that the top factor that affected a firm’s decision in the Philippines was the investment incentives, followed by transparent government policy, low tax rates and tax liability, low incidence of labor strife and legal framework for dispute resolution.
Trade Assistant Secretary Rafaelita M. Aldaba stressed that the income tax holiday being granted to investors were “economically justified” as these have generated billions worth of investments and new job opportunities. For instance, the total income tax holiday incentive claimed in 2012 amounted to P32.9 billion, representing 0.31 percent of the country’s gross domestic product. Amy R. Remo