The removal of restrictions in providing incentives to foreign companies in the newly-signed Republic Act. No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act
will attract more foreign direct investments (FDIs), according to Secretary Ramon Lopez of the Department of Trade and Industry (DTI).
Lopez said with the new law, multinationals are not only going to target the domestic market but will also boost the country’s export market.
The restrictions date back to Executive Order No. 226, issued more than 35 years ago when there was no free trade in Asean nor was there a World Trade Organization) which allowed duty-free access in trade and factories were set up in where they are given incentives and then exported to the Philippines at duty-free rates.
“The CREATE Act rationalizes, modernizes, and offers more relevant incentives to investors in line with the times. Rather than locate in other countries and export to our domestic market, we have to capture those investments as long as they are in the prioritized sectors and allow them to target the domestic market,” Lopez said.
These investments, he said, can also encourage higher local content for manufacturers sourcing from abroad, as part of value chain enhancement.
Lopez said DTI is committed to supporting further liberalization to enhance the country’s competitiveness and create more jobs.
“That is why apart from CREATE, we are also supporting the amendment of the Retail Trade Liberalization Act, Foreign Investments Act, and the Public Service Act to attract more investors,” Lopez said.