NextGen Day

With the ongoing domestic economic recovery, an economist is optimistic about the return of foreign direct investments (FDIs) to the Philippines.

The Bangko Sentral ng Philippines (BSP) revealed on Friday that greater base effects were to blame for both the 23.2% fall in net FDIs to USD9.2 billion in 2022 compared to the prior year and the 76.2% decline in net inflows to USD634 million in December 2022.

According to research, by Michael Ricafort, chief economist of Rizal Commercial Banking Corporation (RCBC), increased interest rates abroad and the general trend of high inflation rates worldwide certainly led to investors’ concerns and the decline in foreign investment into the Philippines.

Nonetheless, Ricafort said that “net FDIs could still be sustained among the highest since the pandemic started” if the economy continues to improve.

He added that the demographics, the effects of China’s reopening, and the investment promises made during the overseas travels of officials of the Marcos administration all contributed to the Philippines’ economy continuing to be predicted to develop at one of the fastest rates in the region.

According to Ricafort, the Philippines will benefit from improved diplomatic ties with wealthy nations and new sources of international investment.

Additionally, he continued, “the recent passage of reform measures, particularly the CREATE (Corporate Recovery and Tax Incentives for Enterprises) law, which reduces the corporate income tax by at least 5 percentage points (from 30 percent) retroactive to July 2020 and provides greater certainty on investments, would also help attract more FDIs to be more decisive and locate in the country.

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