THE Bangko Sentral ng Pilipinas (BSP) is optimistic that investments will continue to flow into the country notwithstanding the geopolitical tensions and the start of a new administration.
"There's a lot of confidence in the Philippine economy," central bank Governor Benjamin Diokno said during a virtual briefing on Wednesday, noting that foreign direct investment (FDI) net inflows surged by more than 50 percent last year to an all-time high of $10.51 billion.
He believes the 2021 amount is "very significant," given the global decline in FDI.
Investors, Diokno also pointed out, will have to distinguish between an economy with strong prospects and an economy with bad prospects.
And, because of the reforms implemented by the current administration, which the future leadership will inherit, he believes the Philippines has what it takes to sustain investor inflows.
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"I think the incoming administration will inherit a much improved economy than what we inherited because of the many legislative reforms that the outgoing Congress passed," the BSP chief said, citing the amended Retail Trade Act, Foreign Investments Act and the Public Service Act as examples.
He went on to say that the present administration has designed the tax system to be less based on income and more dependent on consumption by raising taxes on cigarettes, sugary products and cosmetics.
"And so that the tax structure that we will leave to the incoming administration will be much, much better, and they will be able to take care of the revenue needs for the future," Diokno explained.
"So, I would feel that the Philippine economy will be much better than other economies in the world as a result of these reforms. And so the prospect is bright for the Philippines," he added.
This year, the Bangko Sentral anticipates job-creating FDIs to exceed $11 billion. FDI net inflows reached $1.7 billion in the first two months, up 8 percent from $1.6 billion a year ago.