That foreign direct investment pledges were still on a downtrend over a year since COVID-19 hit home means risk aversion among investors is pretty much still here.
Ruben Carlo Asuncion, chief economist at UnionBank of the Philippines, said, “The decline of pledges may still be related to the pandemic and the general sentiment on the Philippines’ economic recovery prospects.”
As it is, the government is banking on fiscal perks offered by ecozones — and a hefty cut on the corporate income tax rate — to lure back foreign investments potentially lost amid the pandemic, as well as attract new ones. This is contained in the Corporate Recovery and Tax Incentives for Enterprises law which was enacted in late March.
The law, which departs from its original intention to reduce tax perks and raise revenues that was heavily opposed by ecozone operators, keeps incentives intact for a longer period as a way to entice investors to bet on the Philippines.