June 19, 2018, 4:30 pm
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TRAIN a bitter pill, liberalization a boon

The Management Association of the Philippines (MAP) said the group is pushing for amendments of the economic provisions of the Constitution to boost the country’s competitiveness as an investment site.

Ramoncito Fernandez, MAP president, said the tax reform is a “real transition hump” and a “bitter pill to swallow” amid its impact on consumers.

Fernandez clarified it was not the higher excise tax rates that sent oil prices soaring -- from $47 to $78 --but the dollar prices that have changed dramatically coupled with the exchange rate. 

“For an economy dependent on imported fuel the impact is inflationary,” he said.

Fernandez said the government should consider liberalizing industries to foreign ownership to make the country at par with countries like Vietnam, Thailand and Indonesia which are all opening to investors specific industries.

Fernandez said certain economic provisions in the 1987 Constitution may have been relevant post-EDSA revolution but they definitely need revision.

“MAP supports the lifting of some economic restrictions to open business for foreign investment as this will invite capital, innovation and would 
make businesses more productive  and help gain access to more markets. This will  (attract) fresh infusion to undercapitalized sectors … which would eventually lead to job creation,” said Fernandez 

Fernandez said the Tax Reform for Acceleration and Inclusion (TRAIN) is  a “bold initiative to establish a strong foundation  for growth and help finance Build, Build, Build” program of the Duterte administration.

The second package of TRAIN is being deliberated on.

 “We understand the objective of TRAIN 2 is to reduce the corporate income tax to competitive levels against (the Philippines’) neighbors and to make incentives time-bound, transparent and directed to specific sectors,” Fernandez added.

While there are concerns on the impact of the rationalization of incentives on exports and the business process outsourcing (BPOs), Fernandez said MAP believes a careful review of the incentives relevant still to specific industries should be done.

He said TRAIN  is “a painful medicine we have to take to finance infrastructure.”

He said with the  rising cost of capital, official development assistance (ODA) is  definitely an alternative source of financing.

Fernandez said MAP supports observations that the government should not rely too much on ODA in as much as it should not rely too much on public-private partnership (PPP).

“It should be a combination. There are projects where government must take the lead say for multi billion peso projects (that take) 50 years.  PPP cannot be attracted (to that) with  that kind of payback,” he added.

As the Philippines ranked near bottom in infrastructure, Fernandez said the country needs to “plant the seeds now to reap the benefits.” 

He said although the country still has concerns on right-of-way and relocation, infrastructure projects are moving.

Fernandez also said the MAP welcomes the expected signing into law of a measure that eases doing business as well as the passage in the bicameral conference committee of the National ID System as these initiatives.

Meanwhile, presidential spokesman Harry Roque yesterday unscrupulous merchants are taking advantage of the implementation of TRAIN to jack up prices of basic commodities .

“Unfortunately there are those who take advantage of TRAIN and the rising price of oil to raise the prices of different products. We have a suggested retail price, especially on food, let us check if the prices of the products are covered by a suggested retail price, if not report them  to DTI (Department of Trade and Industry),” Roque  said.”

Roque acknowledged that prices of oil and basic products had recently increased which he said was dictated by the movement of oil prices in the world market.

He reiterated that TRAIN is beneficial to the public as it exempted a lot of Filipinos from paying income taxes.

Roque added that government is looking at measures to cushion the impact of the rising prices of oil and commodities like rice.

He said under the TRAIN law, the excise tax on fuel would be suspended if the average Dubai crude based on Mean of Platts Singapore (MOPS) for three months prior to the scheduled increase of the month reaches or exceeds US$80 per barrel.

He said government is also determining if the country could import more affordable fuel from non-Organization of Petroleum Exporting Counties (OPEC) member countries like Russia and the United States.

Roque said China is now drawing its oil imports from the US’ stockpile and the Philippines is studying if it could do the same.

He added that in terms of rice prices, government expects the imported rice to come in before May end which would increase the supply in the market and eventually lower the cost.
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