• Reform needed to maintain FDI momentum – DBS

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    The record-high foreign direct investment (FDI) that entered the Philippines last year may continue this year if the government follows through with implementing policy changes that can sustain the country’s attractiveness to investors, Singapore banking giant DBS said in a research report.

    “Total foreign direct investment reached a record-high $6.2 billion in 2014, equivalent to about 2.2 percent of total GDP [gross domestic product]. Coupled with robust foreign remittances, the economy’s external liquidity position is indeed very strong,” DBS said.

    The bank said that it is also worth noting that about 60 percent of FDI projects approved in 2014 were geared for the manufacturing sector, which has been one of the key positives for the economy in the past couple of years.

    In 2015, DBS said FDI could further grow because some policy changes to attract more FDI are currently being discussed.

    “Among others, these may include new tax incentives for targeted sectors and revision to the negative investment list,” the bank said.

    DBS was referring to the government’s priority bills in Congress, including the proposed fiscal incentives rationalization and the amendments to the Foreign Investments Negative List.

    The fiscal incentives rationalization bill is would provide the government an estimated P30 billion in additional revenue annually.

    Meanwhile, the Foreign Investments Negative List, which is released every two years, identifies investment areas or activities that may be opened to foreigners and those reserved to Filipino nationals.

    Despite the record-high level of FDI recorded in 2014, the Philippines still trails its regional neighbors like Vietnam—which attracted $15.64 billion in FDI in 2014, including more than $8 billion in the fourth quarter alone—and Indonesia, whose 2014 FDI total was about $37 billion.

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