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This paper examines the country’s investment incentive program for foreign investors and its success in attracting substantial FDI inflows. The analysis compares the FDI incentive system and FDI performance of the Philippines with other Asian countries. Since it is difficult to untangle the effect of tax incentives from other factors, the analysis also takes into account other factors such as level of competitiveness, costs of doing business and availability of infrastructure. Our experience tends to suggest that in the absence of fundamental factors such as economic conditions and political climate, tax incentives alone are not enough to generate a substantial effect on investment decisions of investors nor can they compensate for the deficiencies in the investment environment.

Citations

This publication has been cited time(s).

Klemm, Alexander D., Dennis P. Botman, and Reza Baqir, 2008 "Investment incentives and effective tax rates in the Philippines: A comparison with neighboring countries" , International Monetary Fund
Botman, Dennis, Alexander Klemm, and Reza Baqir, 2010 "Investment incentives and effective tax rates in the Philippines: a comparison with neighboring countries" , Taylor & Francis Journals
Philippine Institute for Development Studies, 2008 "Industrial agglomeration and industrial policies: the Philippine experience" , East Asian Bureau of Economic Research
Ali, Mohammad and Alok K. Bohara, 2017 "How does FDI respond to the size of shadow economy: An empirical analysis under a gravity model setting" , Taylor & Francis Journals
Reyes-Macasaquit, Mari-Len, 2008 "Industrial agglomeration in the Philippines" , East Asian Bureau of Economic Research
Aldaba, Rafaelita M., 2014 "Investment liberalization and facilitation toward AEC 2015" , Philippine Institute for Development Studies.
International Monetary Fund, 2012 "Philippines: Technical assistance report on road map for a pro-growth and equitable tax system" , International Monetary Fund

Contributor

Philippine Institute for Development Studies

Authors

Aldaba, Rafaelita M.

Keywords

Foreign direct investment (FDI); investment incentives; corporate taxation

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Jul 04, 2013

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FDI Investment Incentive System and FDI Inflows: The Philippine Experience

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