Businessmen to gov’t: Proceed with caution
The business community in Cebu is reiterating its call for the government to be extra careful in rationalizing the investors’ incentives, otherwise the Philippines will lose in the battle of competitiveness.
Cebu Chamber of Commerce and Industry (CCCI) president Antonio Chiu made this call again, reminding the country’s economic team to handle the second package of tax reform, otherwise known as Tax Reform for Attracting Better and High-Quality Opportunities (TRABAHO bill), with utmost balance.
According to Chiu, the Cebu business community, through the chamber, already expressed its sentiment over the next implementation of tax reform, not to be stingy in giving out incentives to investors.
“We told the economic team never to lose sight of competitiveness,” said Chiu.
The second package of tax reforms are meant to “modernize” fiscal incentives and reduce the corporate income tax rate.
TRABAHO bill contains several features geared towards employment generation.
It is a substitute to TRAIN 2 or the second package of the Tax Reform for Acceleration and Inclusion.
Chiu said that amid rosy projections on the Philippine economy onwards, the country is also challenged with its weakening strength in attracting manufacturing investments, which is one of largest employment-generating industries.
The business process outsourcing (BPO) sector in country is also threatened with this new government policy, said industry experts.
American consulting and research firm Everest Group has urged the Philippines to maintain investor-friendly environment, if it were to continue attracting investors.
Everest Group top executive H. Karthik said with the high potential of outsourcing industry to post growth, its not a wise idea to lessen or scrap any incentive being offered by the Philippines specifically to IT/BPO companies which are located in the economic zone areas.
“There is yet no country I know has stopped giving incentives or reduced them especially that these incentives will be beneficial in the long run,” Karthik said during his recent visit to Cebu.
Outsourcing, in particular, should be given utmost attention as growth has been consistent in the last 10 years, and is expected to sustain upswing growth track in the long term.
Unlike other industries like manufacturing, even retail, growth in outsourcing, on the other hand, has been erratic or inconsistent.
Based on latest data from Everest Group, the Philippines is seen to account for 16 percent to 18 percent of the aggregate outsourced services globally in 2017.
Financial-wise, the Texas-based research company also revealed that the revenue generated by the local call center sector reached US$13 billion in 2017. This is projected to grow this year by seven percent to nine percent.
“Everybody is competing to garner the attention of investors,” Karthik
stressed, implying that it is not wise for the Philippines to change the rules in the middle of the game.
Across the world, Everest Group has seen countries gaining interest in IT/ BPO sector.
“Governments [around the world] even invest in this sector,” he said.
TRABAHO bill gives new investments outside urban areas an additional 2 years of incentives. It also gradually lowers the corporate income tax rate to 20 percent by 2029.
Moreover, the bill retains current incentives for two years to give investors enough time to study the new tax regime and apply for new incentives appropriate to their businesses.
The crucial issue that will define the sustained economic vibrancy in the coming year, Chiu said, is the cost of doing business in the Philippines, and its ability to provide an environment that keeps businesses competitive.
Antonio Chiu, president of Cebu Chamber of Commerce and Industry, reminds the country’s economic team to handle the second package of TRABAHO bill with “utmost balance.”