Busi­ness­men to gov’t: Pro­ceed with cau­tion

The Freeman - - BUSINESS - Ehda M. Da­gooc Staff Mem­ber

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.”

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