MANILA – The Philippines’ English-proficient and skilled labor force and the country’s high growth prospects, rather than its tax incentives for businesses, make it an attractive destination for long-term investors, said Finance assistant secretary Antonio Joselito Lambino II.
In a statement, Lambino said this has been pointed out by business leaders, including a top official of the American Chamber of Commerce of the Philippines, Inc. (AmCham).
He noted that AmCham board director Ariel Lacsamana has said on TV that investors in the Philippines can do away with fiscal incentives, so long as their investments are strategically located in areas with less traffic congestion and their products can move faster along the supply chain.
“Having these export processing zones even if there’s no tax incentive, but if it’s nearer the ports, you don’t have to deal with congestion. So, New Clark City for example is a good one,” Lacsamana, who is also president and managing director of 3M Philippines, said during a recent TV interview.
The Duterte administration is urging Congress to approve its proposal to reduce the corporate income tax (CIT) rate from the current 30 percent to 20 percent on a staggered basis, which will be complemented by overhauling the current convoluted fiscal incentives system to make it time-bound, targeted, performance-based and transparent. The proposal represents Package 2 of the Duterte Administration’s comprehensive tax reform program (CTRP).
Finance secretary Carlos Dominguez III said the CIT reduction will benefit more than 99 percent of corporations in the Philippines, but a small percentage of businesses representing the “interests of a few” has opposed the move to rationalize fiscal incentives.
An independent, third-party survey recently conducted among small and medium enterprise (SME) owners, who took part in last year’s series of “Sulong Pilipinas” workshops organized by the government, shows that 91 percent support these reforms in the corporate tax system as proposed in the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) bill pending in Congress.
The survey also showed that 92 percent of SMEs in the “Sulong Pilipinas” fora consider the TRABAHO bill an important factor in the development of the country, said Lambino, who has been a prime mover of “Sulong Pilipinas” since it was first held in Davao City in June 2016.
The Sulong forum was first convened by the then incoming government’s economic team even before Duterte formally assumed the presidency.
Lambino said Lacsamana has pointed out that while incentives “jumpstart” one’s return on investment, he does not consider the possible loss of certain incentives as a stumbling block to investing in the Philippines because of the country’s high growth prospects and skilled labor force.
Multinational corporations such as 3M, Lacsamana said, plan for the long haul, which is why connectivity and strategic location are important considerations to speed up the movement of goods along the supply chain.
“You just have to be smart. The incentive helps you to at least jumpstart, because you look at it as multinationals would look at the whole region. When we look at investments, the Philippines is one of the good options because of the growth rate by itself. Second, where else can you find a country where North to South, you’ve got English-speaking people, so the labor force itself is attractive,” Lacsamana said./PN