Board of Investments (BOI)-registered investment pledges hit a record high of P1.14 trillion last year.
BOI Chair Ramon Lopez told reporters on Thursday that he was targeting a 10-percent increase in investment pledges this year from the 2019 level, which was deemed as a conservative growth goal.
Lopez had the same growth target for last year, but the final figures exceeded expectations. At P1.14 trillion, the BOI was able to grow its investment pledges registration by around 25 percent from P915 billion in 2018.
Further details, such as a sectoral breakdown of the investment pledges, have not yet been released as of press time.
The agency has been breaking records since 2017. In 2017, investment pledges hit P616.8 billion while the 2018 registration reached P915 billion.
The BOI had breached the P1-trillion mark as early as October last year, thanks to the big-ticket project of Dito Telecommunity Corp., a consortium backed by Davao-based businessman Dennis Uy and China.
The project, which is worth about P210 billion according to the BOI, will get tax breaks as its venture is among the preferred business activities listed in the BOI’s investment priority list. As such, it is eligible for tax breaks, including income tax holidays and duty-free importation of capital equipment.
Last updated in 2017, the BOI’s investment priority list includes telecommunications as one of its preferred investments, but such projects’ eligibility for registration and incentives was limited only to “new players” who are not part of telco giants PLDT Inc. and Globe Telecom. These perks will be rationalized if and when Congress passes the Citira, or the Corporate Income Tax and Incentives Rationalization Act.
The bill will slowly lower the corporate income tax for companies that do business in the Philippines, an aspect that many players welcome since the country’s corporate tax rate is currently the highest in Southeast Asia.
But the bill, which was already passed in the House of Representatives and is pending in the Senate, has drawn a lot of criticism for its provision that will rationalize tax incentives.
Critics fear this would lead to job losses when companies fail to cope with the rising cost of doing business, an aspect that hurt the chances of the Philippine Economic Zone Authority (Peza) in attracting more investment pledges.
Peza, like the BOI, is an attached agency of the Department of Trade and Industry.
The uncertainty over tax perks did not stop the BOI from reaching new heights in terms of investment pledges, since the companies that register under the BOI cater to the consumer-driven domestic market, which is an attractive come-on for investors.
Peza, for its part, covers projects that cater to the overseas market, such as call centers and manufacturers that make products for export. This makes Peza more vulnerable to the uncertainty, since tax breaks—which lower the cost of doing business—form a big part of why these companies invested in the country.