INVESTMENTS are projected to increase in the coming years due to the recent key policy rate cut and the anticipated enhancement to the Philippines' tax incentive, a Cabinet official said.

Finance Secretary Ralph Recto said on Tuesday that the anticipated Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (Create More) bill could boost investment growth in the country.

"We're taking up now in the Senate the Create More bill, which I expect will be passed pretty soon. And that would be a tremendous help," Recto said during the Budget Hearing.

The Create More Bill aims to improve the Philippines' tax incentives, reduce corporate income taxes, allow flexible working arrangements for export businesses and clarify issues from the previous Create bill.

It seeks to reform the tax framework for all taxpayers and enhance the ease of doing business to attract more foreign investment.

A key proposal is to lower corporate income taxes to 20 percent for both domestic and foreign corporations under the Enhanced Deductions Regime.

"Moreover, or at this point in time, the Bangko Sentral has started to reduce interest rates. We expect rates to continue to go down this year and next year, not only in the Philippines but globally, and having said that, expectedly, we would be able to expect more investments in the coming years ahead," he added.

Bangko Sentral ng Pilipinas' (BSP) policymaking Monetary Board has already reduced key policy rates by 25 basis points, bringing the total to 6.25 percent.

Recto said this would help attract more investors as they expect rates to go down further in the coming years.

As of May, net foreign direct investments (FDIs) hit a 16-month low at $499 million, 1.0 percent lower compared to the $504 million seen in May last year.

It was also down from April's $556 million, which is the lowest recorded inflows since January 2023 at $478 million.

While the inflows were low, Recto said this was still a "welcome development."

"We've liberalized certain sectors of the economy. It's just unfortunate that we had the pandemic, and then you had these global geopolitical tensions, and of course, you have high interest rates," Recto argued.

"Once these tensions subside and the interest rates go down, we expect that there will be interest in the liberalizing and investments in these areas," he added.

The BSP expects FDIs to hit a net $9.5 billion this year and further increase to $10.5 billion in 2025.

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