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The Malacañang needs to consider tweaking taxes and its incentives system if it wants to address investor concerns regarding the country’s poor infrastructure.

This was according to Reza Beqir, a resident representative of the International Monetary Fund or IMF, on the occasion of the release of a UN report pointing to a low performing Philippines.

Mr. Baqir said that the Philippines is ranked 77th out of 141 in the United Nations Commission on Trade and Development 2009 World Investment Report, in terms of the potential to attract foreign direct investments (FDI), the country, however, was in 99th in terms of actually getting funds.

Mr. Baqir claimed that a possible funding source could be corporate income taxes. That corporate income tax contribution to Philippines gross domestic product (GDP) was lower than other Asian countries attracting higher FDI. Also, he mentioned that rationalizing fiscal incentives and reforming excise taxes, particularly tobacco is a sustainable way to fund the government’s infrastructure projects.

Among the top reasons why the Philippines is not attracting as much FDI as it should is the poor infrastructure. He said that there is a need to raise investments to build the needed and much better facilities.

A table showed by Mr. Baqir illustrates how excise tax contribution to GDP have fallen fro, 2.6% down to 1% over the last ten years or decade for the reason such as the tax was not indexed to inflation.

“This can only mean that the 1.6% of GDP could be used for infrastructure,” he said.

He noted that the country’s income tax holiday should also be rationalized since it does not attract new business.

Jesse Ang, a resident representative of the International Finance Corp., said that despite the rosy FDI projections for the region, the Philippines was still not benefiting that much since China is getting much of the pie.