European businessmen believe the Philippines has not seen the worst yet of the crisis and stressed the need to pursue all the reforms, such as reduction of corporate income tax rate (CIT) to help the economy recover from the impact of the new coronavirus disease (COVID) 2019 pandemic.
This developed as the European Union (EU) expressed concern over the Philippines’ move to reimpose the death penalty which might lead to the withdrawal of tariff-free privileges of the country from the EU under the Generalized System of Preferences (GSP).
Nabil Francis, president of the European Chamber of Commerce of the Philippines, in a webinar said the Philippines’ strategy to recovery should not be based on the hope of a vaccine.
Francis also said the Philippines lagged not only economically but on health strategy referring to the 16.5 percent contraction of the GDP and the rising number of COVID cases in the region.
Francis said it is too early to say that there is an exodus of foreign companies leaving the Philippines, adding “we need to remain optimistic. I still believe this is temporary.”
But he said companies like exporters with tiny margins are exploring the pros and cons of staying or leaving.
“But if you put yourselves in the shoes of investors and you do not see light at the end of tunnel, it is hard to put your money in the economy. You will want to see the dust settle, “ Francis said.
For investors to stay, he said, the right business conditions should be there.
“We cannot continue to work with the highest CIT rate in Southeast Asia if we want to be a magnet of FDIs (foreign direct investments),” Francis added.
He cited the case of Pilipinas Shell Petroleum Corp. which announced yesterday it will stop its refinery operations in Batangas.
“It’s the kind of news we have to be careful if it is happening to other businesses,” Francis said.
He said the Philippines has turned into Asia-Pacific’s COVID hotspot from the happiest country in the world. It has also become worst off economy-wise despite having the hardest and longest lockdown.
Francis said the economy can no longer afford another strict quarantine without aid to people since unemployment rate has surged to 17.7 percent, leaving people with no income nor savings.
“We need to continue with our lives… we cannot remain in confinement.”
ECCP is seeking the passage of the Corporate Recovery and Tax Incentives for Enterprises Act which drops the CIT rate to 25 percent.
Francis said the reduction should be retroctive to January 2020 to attract FDIs.
Other reforms that he said should be pursued include the amendment to the Public Service Act, Retail Services Act and the shortening of the negative list to allow more foreign investments as well as improved infrastructure especially of internet through the passage of the Open Access Act as well as ease of doing business.
Maurizio Cellini, head of the Economic and Trade Section at the EU Delegation to the Philippines, in a press conference meanwhile said the EU will continue to monitor the issues that might affect the GSP privileges of the Philippines not just on the death penalty but also on labor, human rights, environment and good governance
Cellini said there will be a monitoring mission from the EU, the schedule of which is not determined due to the pandemic.
“We will look at the picture at a global angle;we will take into account other (issues)
in these areas and draw assessments,” he said, adding monitoring is a normal process in the GSP review.
He noted, however, the EU takes note of statements and intentions made publicly by the government.
The last monitoring was done two years ago and the report was made public early this year. (I. Isip)