FINANCE Secretary Carlos Dominguez called for the swift approval of the Corporate Income Tax and Incentives Rationalization Act (CITIRA), which he said should now include “flexible tax and non-tax incentives” so the government can better target specific investors that it wants to invest in the economy.
Dominguez told reporters through Viber yesterday that that “flexibility” refers to mechanisms that will allow the government to tailor-fit incentives, both fiscal and non-fiscal, to specific investors whose relocation to the Philippines can yield significant economic returns for the country.
Benefits would include good jobs for the workers and co-location of key players in cutting-edge industries, he added.
“Under the original CITIRA proposal, the President can extend the duration of incentives upon the recommendation of the Fiscal Incentives Review Board (FIRB). Enhancements under a more coronavirus disease 2019 (COVID-19)-responsive version of the bill could include the power of the President, upon recommendation of the FIRB, to grant a mix of incentives that better suit an investor’s unique needs,” Dominguez said.
“We are already exploring this proposal with relevant committees and leaders of Congress. That would make the system more responsive to investments that will serve our people well,” he added.
During a televised briefing yesterday, Dominguez asked the President’s support for the swift approval of the CITIRA bill, so that the Congress could pass it by June 3, or before the sine die adjournment of the Legislature.
“To attract investors who want to relocate from other countries and in search of resilient, high-growth potential economies like the Philippines, this will involve the urgent passage of CITIRA,” Dominguez said.
“One of the structural problems of our current system is the limited room for the kind of negotiations that our neighbors are having to attract potential investors. Our menu of incentives should not be a one-size-fits-all approach. There are potential investments that are uniquely deserving of incentives for reasons that serve the public interest, but their needs do not fit the kind of incentives specified in our laws,” he added in his Viber message.
The CITIRA bill was approved by the House of Representatives in September 2019, but remains pending in the Senate.
Meanwhile, aside from the urgent passage of the CITIRA, Dominguez has recommended accelerating the implementation of the “Build, Build, Build” program and scaling up food production and its logistics chain as part of the priority measures that the government needs to undertake to stimulate domestic consumption and get the economy back on track at the soonest.
Dominguez said the infrastructure modernization program is the “best driver of economic growth” and hence, should be restarted subject to compliance with minimum health standards, once the mobility restrictions are lifted and the COVID-19 outbreak is contained.
To reinvigorate consumer spending, Dominguez said the government should promote the manufacture of products that have “strong and inelastic demand,” notably by businesses involved in food production and logistics.
The finance chief said the government should also support the whole value chain of food production, including the establishment of food markets for efficient distribution — similar to the fruit and vegetable markets established decades ago in Japan — where farmers can directly sell their produce to consumers.
“We have to stimulate demand, and that’s with ‘Build, Build, Build’ and push(ing) food production,” Dominguez said during the Monday night meeting of the Inter-Agency Task Force on the Management of Emerging Infectious Diseases presided by President Duterte.
He said even before the economic recovery program is finalized, the government should take the lead in stimulating consumer demand to help businesses survive and keep the economy afloat.
Dominguez added it would be useless to provide relief to businesses if demand remains weak and consumers lack the means to buy their goods and services.
He likewise proposed the mass hiring of contact tracers to boost the government’s efforts to stop the local transmission of COVID-19, while providing jobs.
The mass hiring of contact tracers, he said, will help offset the impact of the estimated 1.2 million to 1.5 million job losses resulting from the economic fallout triggered by the COVID-19 pandemic.
“We need to hire enough contact tracers to match the numbers we expect that will come with more testing,” Dominguez said.
