The Board of Investments (BOI) is expecting to end the year with over P700 billion worth of investment commitments, a 30-percent decline from 2020, despite the passage earlier this year of a new corporate tax reform law that was expected to lure more investors.
BOI Chair Ramon Lopez said some big-ticket projects in the pipeline, including an integrated steel mill, might not be approved in time to make the final count, given the impact of new variants of the COVID-19 virus and their corresponding government restrictions.
“Thus, we estimate to complete the approval process for over P700 billion worth of projects for 2021,” he said in a recent Viber message.
Below target
Back in November, the BOI expected to end the year with around P600 billion of investment pledges. While the final figure is slightly higher than what was earlier estimated, it is still below the already readjusted BOI target for 2021 at P905 billion. The BOI originally aimed for P1.25 trillion in 2021.
At this rate, the BOI—the investment arm of the Department of Trade and Industry which Lopez also heads—will end the year with a decline, despite the promise of the Create law, or the Corporate Recovery and Tax Incentives for Enterprises Act.
This does not bid a strong start for the government’s Create law, which cut corporate taxes and rationalized tax breaks.
Considered as one of the tax reform packages pushed by the Duterte administration, it was passed in March this year, after more than three years of uncertainty in the business community about the exact nature of tax breaks under the new law.
Lopez had earlier said the Create law “is expected to bring in [a] massive inflow of investments that will create more jobs.”
When the then-bill passed the Senate in November last year, Finance Secretary Carlos Dominguez III also called it “one of the largest economic stimulus measures in the country’s history.”
In 2019, the BOI marked a record year with P1.14 trillion in investment pledges. This was followed by hitting P1 trillion in 2020 despite being a pandemic year, in part because of San Miguel Corp.’s airport project in Bulacan.
When asked for the implications of the missed 2021 target in view of the Create law, BOI Managing Head and Trade Undersecretary Ceferino Rodolfo said in an interview last November that the tax reform law still helped, but it could only do so much.
“Create was actually helpful [in attracting investments],” he said.