THE electronics industry called for a review of the fiscal incentives system under Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, noting that the next government needs to address the weaker-than-expected levels of foreign investment the law has generated.
“On one hand, CREATE is wonderful. It reduced the corporate income tax. But I think, this is a wish for the new administration is to revisit the rationalization of incentives,” Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) President Danilo C. Lachica said during the second day of the 10th Arangkada Philippines Forum Tuesday.
Mr. Lachica said the industry is concerned about investment growth, in which CREATE has not lived up to its billing.
“If you look at 2020 numbers, we’ve seen anywhere from 45%-60% growth in Philippine foreign direct investment (FDI). But we’re comparing the Philippines with investments from previous years. What I believe we should be looking at is investment in the Philippines vis-à-vis our ASEAN neighbors,” Mr. Lachica said.
“In 2020, the $2.2 billion that the Philippines got for FDI pales compared to (neighboring countries). Indonesia got 13 times more, Malaysia seven times more, Thailand 7.3 times more, and Vietnam 13.5 times more. We pride ourselves in being an investment destination. But I hope we can do a root cause analysis. We have problems in power and logistics, but our labor is very productive. We have assets,” he added.
“I hope the next administration can revisit that, especially the ability to attract investment on the same scale as our ASEAN neighbors. If ever, and this might be going out on a limb, I would like the next administration to revisit the ability of the Philippine Economic Zone Authority (PEZA) to attract and approve investment,” Mr. Lachica said.
Daniel Alexander, Australia – New Zealand Chamber of Commerce of the Philippines president, said in a separate virtual press conference for the 10th Arangkada forum that any change to PEZA should be pursued cautiously.
“I think any change to PEZA or organizations like it should be really reviewed very carefully. Any change to PEZA or granting them additional power that would help them bring in investment can only be seen as a positive,” Mr. Alexander said.
Trade Secretary Ramon M. Lopez said in his keynote speech during the forum that the Philippines is a top exporter in nearly 200 types of product.
“The Philippines plays an important role in international trade with the country ranking among the top 10 exporters for 194 tariff lines. With our industry development-centric approach to building our export competitiveness, we are optimistic that the number of tariff lines where the Philippines is considered a global leader will increase in the next couple of years,” Mr. Lopez said.
As our country navigates this fast-changing world amidst the pandemic, we are confident that the Philippines remains a premium investment destination (in the region),” he added. — Revin Mikhael D. Ochave