PHL miss­ing out on in­vest­ment amid US-China ten­sions — PEZA

Business World - - The Economy - Jan­ina C. Lim

THE Philip­pines is miss­ing out on the op­por­tu­nity to at­tract in­vestors dur­ing a pe­riod of trade ten­sions be­tween the United States and China, due to un­cer­tainty sur­round­ing the coun­try’s tax in­cen­tive regime, the head of the eco­nomic zone reg­u­la­tor said.

“TRAIN 2 (or pack­age two of the Tax Re­form for Ac­cel­er­a­tion and In­clu­sion law) is re­ally badly timed. You know why? Be­cause of the trade war be­tween US and China,” Philip­pine Eco­nomic Zone Au­thor­ity (PEZA) Direc­torGen­eral Char­ito B. Plaza told re­porters on the side­lines of an awards event in Makati City on Wed­nes­day evening.

“I have re­ceived many ex­pres­sions of in­tent from com­pa­nies in China look­ing to trans­fer to the Philip­pines so they can ex­port to the US and Europe,” she added.

The Philip­pines ben­e­fits from US and Euro­pean Union gen­er­al­ized sys­tem of pref­er­ences pro­grams or pref­er­en­tial tar­iffs al­low­ing se­lected de­vel­op­ing coun­tries to pay re­duced or zero du­ties on ex­ports, mak­ing it an at­trac­tive ex­port base for man­u­fac­tur­ers tak­ing cover from the trade war, she said.

The po­ten­tial re­lo­ca­tors that have ap­proached PEZA are en­gaged in man­u­fac­tur­ing, in­for­ma­tion tech­nol­ogy-busi­ness process out­sourc­ing, and other in­dus­tries. She said they re­main wary of the Philip­pines pend­ing the pas­sage of the se­cond phase of tax re­form, which is known in Congress as the TRABAHO bill.

She said the in­vestors are also con­sid­er­ing other South­east Asian coun­tries like Indonesia and Viet­nam which en­joy sim­i­lar GSP priv­i­leges and of­fer lower costs for power and la­bor.

In a mo­bile mes­sage, Trade Sec­re­tary Ra­mon M. Lopez said his depart­ment had re­ceived at least four in­quiries to re­lo­cate here, in­clud­ing a bag man­u­fac­turer a man­u­fac­turer of bags.

The Con­fed­er­a­tion of Wear­able Ex­porters of the Philip­pines con­firmed re­ceiv­ing such in­ter­est at midyear, los­ing out to Myan­mar.

“There was one that was sup­posed to come here in the fourth quar­ter of the year They pulled out and they went to Myan­mar. That’s about 2,500 workers,” Tere­sita Joc­son-Ag­oncillo, ex­ec­u­tive di­rec­tor of CWEP, said in a phone in­ter­view.

“It did not go through be­cause of all our un­cer­tain­ties,” she added.

Ms. Joc­son-Ag­oncillo said the Philip­pines is cur­rently un­able to com­pete with Myan­mar, whose ap­parel ex­ports are about $3 bil­lion an­nu­ally, against the $1.02 bil­lion posted by the Philip­pines last year.

Ms. Plaza said in­cen­tives are one way for the Philip­pines to make up for its in­fra­struc­ture de­fi­cien­cies.

“We have a lot of de­fi­cien­cies on in­fra­struc­ture, it in­fra­struc­ture. Our power costs are one of high­est. The thing that at­tracts in­vestors now is in­cen­tives,” Ms. Plaza added.

She added that some PEZA lo­ca­tors are pre­par­ing to move op­er­a­tions out of the Philip­pines once the tax re­form bill ra­tio­nal­iz­ing in­cen­tives is passed.

“They are now pre­par­ing to trans­fer be­cause they are multi­na­tion­als, they have other branches. It’s easy for them to trans­fer,” Ms. Plaza said, with­out nam­ing any com­pa­nies.

Dur­ing her speech at the 27th Busi­ness Jour­nal­ism Awards of the Eco­nomic Jour­nal­ists As­so­ci­a­tion of the Philip­pines, Inc., Ms. Plaza also re­vealed her plan to take the mat­ter up with Pres­i­dent Ro­drigo R. Duterte.

“Enough of the scold­ing, enough of the bul­ly­ing from other lead­ers of gov­ern­ment… I am now very vo­cal (about) not push­ing through with TRAIN 2,” Ms. Plaza said.

On the side­lines, Ms. Plaza said PEZA has given up try­ing to plead its case to the Cabi­net’s eco­nomic man­agers.

“The tech­nocrats like the DoF (Depart­ment of Fi­nance) peo­ple see it dif­fer­ently… All they are think­ing is where to get taxes,” Ms. Plaza said.

She said Fi­nance Un­der­sec­re­tary Karl Ken­drick T. Chua’s “ex­po­sure to the re­al­i­ties on the ground is not cred­i­ble.”

Ms. Plaza has sought an ap­point­ment with Pres­i­dent Ro­drigo R. Duterte.

“I still hope the Pres­i­dent will un­der­stand, es­pe­cially now with in­fla­tion,” which she claims was caused by ex­cise taxes im­posed un­der TRAIN 1. “The Pres­i­dent, I think will lis­ten,” Ms. Plaza said. —

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