Foreign Direct Investment



Definition: FDI stands for Foreign Direct Investment, a component of a country’s national financial accounts. Foreign direct investment is investment of foreign assets into domestic structures, equipment, and organizations. It does not include foreign investment into the stock markets. Foreign direct investment is thought to be more useful to a country than investment in the equity of its companies because equity investments are potentially “hot money” which can leave at the first sign of trouble, whereas FDI is durable and generally useful whether things go well or badly.

This above chart shows how the Philippines rate in Foreign Direct Investments in comparison to our neighboring Asian countries. We rate 9th and even Vietnam which was rampaged by “war” is now ahead of us.  Why ???  Can you imagine how much better we could do if our foreign investment policies become more competitive ? Sad fact is that the government knows very well what needs to be done to spur investments into the country yet, we hardly see much change !

As mentioned in my previous blogs, the Business Process Outsourcing and the Overseas Foreign Remittances do not flow into the “masses” and that is why POVERTY remains a major problem in this country.

Forms of FDI incentives

Foreign direct investment incentives may take the following forms:

  • low corporate tax and individual income tax rates
  • tax holidays
  • other types of tax concessions
  • preferential tariffs
  • special economic zone
  • EPZ – Export Processing Zones
  • Bonded warehouses
  • investment financial subsidies
  • free land or land subsidies
  • relocation & expatriation
  • infrastructure subsidies
  • R&D support
  • derogation from regulations (usually for very large projects)

This is something we really have to look forward to in the coming Presidential Elections in 2016 !

Have a great day !


Robert G. Sarmiento Properties
Professional Affiliation :
Real Estate Broker’s Association of the Philippines
President, Greenhills Chapter 2008-2009
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