INCENTIVE PACKAGES FOR EXPORTERS, DOMESTIC FIRMS
Rather than remove incentives given to locators, Philippine Economic Zone Authority Director General Charito Plaza proposed providing incentives that meet the concerns of different businesses
The Philippine Economic Zone Authority (Peza) is proposing the creation of separate incentive packages for export companies and domestic enterprises, citing their distinct needs and demands.
“This is the reason we react to the (Tax Reform for Attracting Better and High-Quality Opportunities or Trabaho bill) because they are changing the incentive scheme which we think is still effective in attracting foreign investors,” said Peza Director General Charito Plaza.
She said that by creating separate packages, concerns of different types of businesses will be met. Plaza said incentives are a come-on for foreign firms to set up their businesses in the country. She said it is an exchange of the investment they pour in, jobs they generate and economic activities they create in choosing the country.
“Instead of changing the rules, the taxation laws, we should enhance it,” said Plaza.
According to the Peza chief, exporters who are mostly part of multinational firms, are naturally efficiency seekers, which means they are looking at incentives when deciding to pour in investments. They also look at the ability of the country to meet their supply chain needs.
Plaza also mentioned the need for the country to grant incentives for domestic enterprises so they can participate in the supply chain. This way, the country can address the trade imbalance.
“Once we can fully supply raw materials (to these industries), we can also attract more foreign investors to come to the Philippines,” she said.
Plaza admitted that Trabaho has sowed fear among investors. She blamed it for the slowdown in new investments and expansions, as investors are on a waitand-see stance.
“They are against it. They are happy with the current incentives,” she said.
Peza pledges in 2018 fell by 41 percent compared in 2017.
Peza showed investments approved by the agency reached P140.24 billion last year, lower than the P237.57 billion in 2017.
Trabaho seeks to lower the corporate income tax and repeal over 100 special tax laws to rationalize fiscal incentives.
Senate Minority Leader Franklin Drilon earlier warned that at least 1,200 companies might leave the country due to a sudden shift in policy, which would cut the incentives given to foreign investors.
Aside from that, Drilon said the country stands to lose about 150,000 jobs generated through the grant of incentives by the country’s top investment promoting agencies, namely the Board of Investments and Peza, due to Trabaho.
The senator expressed concerns over the poor performance of the country’s export industry, where the Philippines lags behind its Southeast Asian neighbors. In 2017, Singapore’s exports were valued at a staggering US$373 billion, Indonesia at $169 billion, Thailand at $237 billion, Malaysia at $218 billion, and Vietnam at $215 billion. The Philippines’s exports only stood at $69 billion. /