SEN. Imee Marcos on Monday said government must move fast to entice multinational companies pulling out from China due to the COVID-19 pandemic so that new jobs can be created in the country’s post-quarantine economy.
Marcos, who chairs the committee on economic affairs, cited the emerging trend of factory relocations from China, with Japan, the United States, and the European Union planning to transfer production of their crucial imports from the mainland due to supply shortages amid the pandemic.
She said that even Chinese manufacturers are planning to relocate to neighboring countries to evade high tariffs imposed by the United States on China-made goods produced for large American companies like Apple, Google, and Microsoft.
“The Philippines has a competent workforce and a command of English that removes language barriers felt in other Asian countries, but our economic managers must study more closely and quickly the incentives offered by Vietnam, Thailand, Malaysia, and Indonesia, which are ahead in the race to attract foreign investors,” Marcos said.
Marcos wants the Foreign Investment Act via Senate Bill 1024 amended and set up an Investments Promotion Council and add “long-delayed incentives” for foreign investors.
Among the incentives in the bill are raising foreign ownership limits, lowering the $2.5 million capital requirement to set up operations, simplifying requirements for all national-level permits, and criminalizing wrongdoing related to their procurement.
“The emerging economic trend and opportunity amid COVID-19 also calls for a second look at the CITIRA (Corporate Income Tax and Incentives Reform Act),” Marcos said, adding the proposed 10-year period to scale down corporate income tax from 30 percent to 20 percent may leave the Philippines “missing the boat.”
She said Indonesia is cutting its corporate income tax from 25 percent to 20 percent by next year.
She added the government must also take a cue from other Asian countries like India, a competitor in lower-value manufacturing and business process outsourcing (BPO), which has already cut corporate taxes to as low as 15 percent for the 2019-2020 financial year and has been actively negotiating with potential Japanese investors and foreign chambers of industry.
“The resulting CITIRA bill must keep manufacturing companies and BPOs from leaving our export zones, while being able to take advantage of the impending exodus of factories from China,” Marcos said.
