Foreign investment approvals down 72.8% to P75.6B

Foreign-led projects approved by the country’s investment promotion agencies (IPAs) in the third quarter fell 83 percent to P31 billion amid prolonged COVID-19 quarantine.

The Philippine Statistics Authority’s (PSA) latest report on approved foreign investments showed that the value of projects registered from July to September to avail themselves of tax and other fiscal perks once they start operations here dropped from P182.4 billion a year ago, when a big-ticket information and communications technology project was registered with the Board of Investments (BOI).

Besides the BOI, the six other IPAs included in the PSA’s quarterly report were the Authority of the Freeport Area of Bataan, the BOI-Autonomous Region in Muslim Mindanao (BOI-ARMM), the Cagayan Economic Zone Authority (Ceza), Clark Development Corp. (CDC), the Philippine Economic Zone Authority and the Subic Bay Metropolitan Authority (SBMA).

Only Peza registered year-on-year growth in foreign investment commitments during the July-to-September period with P20.3 billion, up 97 percent from P10.3 billion last year.

In Afab, green-lit foreign projects declined 99.2 percent year-on-year to P1.2 million; BOI, down 93.8 percent to P10.6 billion; Ceza, down 30.9 percent to P50 million; CDC, down 91.2 percent to P13.5 million, and SBMA, down 83 percent to P60.5 million.

BOI-ARMM was unable to generate any foreign investment during the first nine months, PSA data showed.

From January to September, IPAs’ cumulative foreign investment approvals amounted to P75.6 billion, a 72.8-percent decline from P277.9 billion a year ago.

The bulk of third-quarter foreign investment pledges came from firms in China worth P9.6 billion, followed by the United States, P7.2 billion; the United Kingdom, P4.8 billion; Japan, P3.3 billion, and Singapore, P2.7 billion.

Including IPA approvals of Filipino-led projects, the total value of investment commitments in the third quarter reached a bigger P176.6 billion as local investors pledged to rollout P145.5 billion worth of ventures.

But the total amount of local and foreign projects given the go-ahead by IPAs during the third quarter slid from P515.7 billion last year.

To attract more big-ticket foreign investments and rebound from the pandemic-induced slump, the government’s economic team is pushing for the passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill, which will slash firms’ tax rates while providing generous fiscal perks to big-ticket projects.

The Senate-approved version of CREATE slashed to 20 percent the corporate income tax rate to be slapped on small firms with total assets, except land, of P100 million or less plus P5 million in net taxable income.

The rest of the bigger firms will enjoy a reduction in their tax rate to 25 percent from 30 percent at present—the highest in Asean.

Once signed into law by President Duterte, the lower corporate tax rates under CREATE will retroactively apply to July this year.

On top of the tax relief, CREATE will also empower the President to extend more generous, tailor-fit incentives to big investments while keeping their perks targeted, transparent, time-bound and performance-based.