The Philippine Economic Zone Authority (PEZA) has made a last-ditch effort to retain its powers, authority and the fiscal incentives it grants as the Senate deliberate the passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill.
“While PEZA fully supports the goals of rationalizing corporate incentives, the current situation of global economy is not the appropriate time to change the current incentives’ regime. What the country needs now is stable economic policies and guarantee the sanctity of existing contracts. The government must focus on reducing the cost of doing business and increase the international competitiveness of the Philippines in export-oriented industries,” said Charito Plaza, PEZA director-general, in a letter to senators and congressmen n a letter dated Sept. 10, 2020.
PEZA maintains its recommendation that CREATE should be implemented first for domestic enterprises as they will benefit the most from the reduction of the corporate income tax and enjoy for the first time incentives in rationalized manner. This will in turn maximize the micro, small, and medium enterprises production, manufacturing export capabilities, complete supply chain, and encourage exporters to minimize import dependence.
Plaza said with the global pandemic, “we need to do enhance our incentives to make it more attractive for getting investors who are moving out of other countries like China.”
PEZA recommended for the power of the Fiscal Incentives Review Board to be limited to the approval of incentives as recommended by the investment promotion agencies which should retain their regulatory functions.
Under the proposed CREATE bill, export-oriented enterprises will be exposed to lengthy and arduous process that will surely expose them to corruption and red tape.
To date, 2,634 companies or 85 percent are now operating nationwide. Continued operations have allowed 1,181,115 workers or 76 percent of the workforce to work even under skeletal or work-from-home arrangements.
Among the companies, 77 percent of the information technology-business process outsourcing sector are now operating while in the manufacturing sector, 91 percent are operational.