This is an article repost.
THE long drawn-out deadlock between the Board of Investments (BOI) and the Philippine Economic Zone Authority (Peza) over a pending remedial legislation to rationalize fiscal incentives remained unresolved despite its inclusion in the list of urgent measures set to be taken up in the upcoming Legislative-Executive Development Advisory Council (Ledac) meeting called by President Aquino this week.
“One thing is clear from this hearing: The two main agencies, Peza and the BOI, have not yet agreed on anything since our last hearing in March,” Sen. Ralph Recto said after presiding over Monday’s public hearing of the Senate ways and means committee, which is formulating proposed reforms in the fiscal-incentives system.
Recto lamented that despite being identified as a priority measure by the President—which was why it was included in the Ledac meeting on Tuesday—the Peza and the BOI have yet to agree on the blueprint of the fiscal incentives rationalization.
Officials of the two agencies, however, indicated to the Senate that they were united in their opposition against plans to merge the functions of Peza and the BOI.
They said Peza and the BOI should be allowed to retain their parallel functions to grant fiscal incentives that were originally designed to attract investments.
Both the BOI and Peza also stuck to their similar positions against the lifting of income-tax holidays that are being offered in order to lure investors to the country.
Investments Undersecretary Cristino Panlilio, appearing before the committee, also said the existing functions of Peza and the BOI should be retained.
After the hearing, Recto noted that while it is, indeed, an administration priority measure being part of the Ledac agenda, the government itself is having difficulty figuring out the right approach as far as rationalizing fiscal incentives is concerned.
He recommended that Peza, since its main constituents are exports firms, should simply concentrate on the export sector and let the BOI focus on regulating fiscal incentives for domestic companies.
At the same time, the senator acknowledged that the incentive package provided by Peza appears to be working, as it was able to woo more exporters to its special economic zones.
Exporters account for about 87 percent of Peza locators and have generated over 700,000 jobs.
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By: Butch Fernandez
Source: Business Mirror, Aug. 15, 2011
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To read more about the Rationalization of Fiscal Incentives, see Part IV: General Business Environment – Legislation and Part IV: General Business Environment – Macroeconomic Policy.
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