NextGen Day

An economist predicts that net foreign direct investments (FDIs) into the Philippines would rise further in the coming months, owing in part to increasing government expenditure on infrastructure.

The Bangko Sentral ng Pilipinas (BSP) announced on Monday that net FDIs increased by 52% year on year to USD1.3 billion in July. Year on year, the amount at the end of July 2021 increased by 43.1 percent to USD3.9 billion.

Aside from increased government infrastructure spending, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort stated that the BSP’s accommodative policy stance and the passage of reform measures such as the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law and the Financial Institutions Strategic Transfer (FIST) law, among others, are pluses that are expected to attract foreign investments.

According to Ricafort, the openness of the domestic economy increases FDIs.

He did, however, say that this “may be a function of better controlling/managing new Covid-19 (coronavirus disease 2019) local cases in light of recent lockdowns in the NCR (National Capital Region) to partially address this, as well as the expected increase in Covid-19 vaccine arrivals and rollouts locally in the coming weeks/months.”

“Proposed more localized/granular lockdowns (as opposed to lockdowns at the city/provincial/regional levels), as well as any additional measures to reopen the economy, could allow higher capacity for some businesses/industries, thereby fundamentally supporting a more conducive environment for more FDI inflows into the country,” he added.

The monetary authorities anticipate USD7 billion in net FDI this year.

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