Ecozone stakeholders worried TRAIN 2 will drive away FDI

By Charmaine A. Tadalan | July 31, 2018, 8:43 pm

Stakeholders representing various economic zone constituencies said they are worried about the impact of the government’s plan to reform corporate incentives on foreign direct investment (FDI).

Representative Jose Enrique S. Garcia III of Bataan, whose economic zone is a major contributor to the local economy, expressed concern that the Philippines is currently not a leading destination for FDI, and that reforming their incentives might make things worse.

“My concern is we are not on top of the list when it comes to the FDI and then we’re changing the investment scheme. I don’t know how Department of Finance (DoF) expects us to rise by changing the investment scheme that we already have,” Mr. Garcia said.

Philippine Economic Zone Authority legal counsel Francis James Brillantes also pointed out the DoF must take into account the “constantly evolving, constantly innovating” global supply chains.

“We are now part of a global economy. Part of being in a global economy is that there is a global supply chain, and the BPO (Business Process Outsourcing) industry, including voice, is seeking efficiencies,” Mr. Brillantes said.

He also said BPO firms may leave the country to transfer to more competitive economies and possibly attract Filipino workers overseas.

“Instead of reinvesting, it is easy for them just to transfer and lease in another country, purchase equipment there and hire qualified employees in that country and possibly just hire Filipinos from there,” he said.

He added: “Again we will only be exporting Filipinos because there are no longer available good jobs here.”

He proposed the bill should consider the charters of Investment Promotion Authorities which are based on attracting capital investment and creating employment.

“We should look at the overall economy. This bill should not just affect revenue to be earned by the government, but also consider employment and social progress that investors bring to our country,” he said.

Meanwhile, Speaker Gloria M. Arroyo said the passage of the second package of comprehensive tax reform, which deals with streamlining investment incentives, is a priority under her leadership of the House.

“I don’t want to be very explicit about the timeline but it’s priority,” Ms. Arroyo told reporters in a chance interview Tuesday.

“I said in my very short statement upon assumption that the first and foremost job I have as a Speaker is to carry out the legislative agenda of President (Rodrigo R.) Duterte,” Ms. Arroyo said.

The Speaker also said she prefers to call the new tax reform package “Corporate Incentives Reform,” instead of TRAIN 2 (Tax Reform for Acceleration and Inclusion).

The DoF, meanwhile, allayed fears that streamlining tax incentives will drive away investment from the Philippines.

“The industries or firms that create jobs that benefit the country should have nothing to fear. Of course, those industries that do not benefit the country are those we are asking, after so many years of being helped by the government, to take their turn to help,” Finance Undersecretary Karl Kendrick T. Chua told the Ways and Means panel.

Committee chair Dakila Carlo E. Cua also proposed that the measure include incentives for reinvested profit. “Can we still explore the possibility of convincing these firms to reinvest? We should be encouraging the reinvestment of the majority of the profit back into the economy to create more jobs,” Mr. Cua said.

Mr. Chua said the proposed bills offer a “reinvestment allowance,” which will be granted to firms or industries that opt to stay in the country.

“Since the package two is performance based, we will continue to support the worthy industries if they create jobs,” Mr. Chua said.

Source: http://www.bworldonline.com/ecozone-stakeholders-worried-train-2-will-drive-away-fdi/