The Philippines is not top of mind among investors relocating from China but the head of the Department of Trade and Industry (DTI) is confident a tax reform bill once passed will add to the country’s attractiveness as an investment destination.
At the Senate hearing on the DTI budget yesterday, Secretary Ramon Lopez admitted there has been a decline in the foreign direct investments the past year, though he did not give numbers.
He said inflows were affected by the competitive environment as the Philippines is up against other countries in inviting foreign investors.
Lopez also said the Philippines also needs to address some structural reforms such as the passage of the amendments to the retail trade law and the public service act and the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
Lopez also said infrastructure development also needs to catch up and noted the Build Build Build will help support this.
From 135 business leads of foreign investors moving out of China, the Board of Investments (BOI) was able to get a handful. These include a company making electronics parts for satellites, a manufacturer of motorcycle engines and another in consumer electronics.
“We are not the first choice nor the biggest but there are indications we were able able to attract projects that used to be (located) in China,” Lopez said.
He added the enactment of CREATE would attract more investments especially with the immediate reduction of the corporate income tax rate (CIT) to 30 percent from 25 percent.
Lopez noted the new draft of CREATE also addressed the concerns of exporters on the transition by allowing a more liberal and longer time to shift to CIT by those which register 100-percent export performance.
He said the DTI hopes Congress will consider to lower the requirement to 90 percent.
He said such changes in the incentive scheme would still boost the investment climate since “it is clear we are making incentives time-bound as a matter of principle.”
Lopez also proposed to finetune a provision in the law where the DTI suggests that investment promotion agencies will still do the approvals for most investment registrations and the Fiscal Incentive Review Board will handle only the major projects.