WHEN it comes to business and investments, it appears that the Marcos administration has this tendency to rely on legislation to solve most of the hurdles to growth and development. Following the CREATE Act of 2021 that embodied new pro-business policies such as incentives and tax cuts, President Ferdinand Marcos Jr. and Congress still came up with another law, the CREATE MORE Act that lowers corporate income tax rates and grants more fiscal incentives to qualified companies.
The new legislation is designed to entice both foreign and local investors to do business in the country, and for those who are already here, to expand their operations. The ultimate aim is to perk up the overall economic activities in the country, create more jobs for the people, and achieve a more enviable level of economic growth.
The numbers should prod President Bongbong’s economic team to seriously rethink what we are doing wrong, and return to the drawing board to plan anew. According to the United Nations, some $6.2 billion in foreign direct investments flowed into the Philippines last year, smaller compared to Singapore’s $159.7 billion, Indonesia’s $21.6 billion and Vietnam’s $18.5 billion.
‘We just hope that these expectations for a vibrant Philippine economy will be realized soon.’
This dismal performance vis-a-vis our neighbors is ironic since our officials had been touting the Philippines as one of the fastest-growing economies in Asia, which is not entirely false.
The Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) lowers the income tax rates of registered business enterprises to 20 percent from 25 percent. This measure became Republic Act 12066, and proponents said it will make the country’s tax incentives regime more globally competitive, investment-friendly, predictable and accountable.
The Department of Trade and Industry said it is a “game-changing” legislation poised to transform the Philippine economic landscape. It would strengthen the country’s position as an attractive investment destination through significant tax incentives and regulatory reforms.
Even the Management Association of the Philippines said CREATE MORE will help improve our global competitiveness by improving the ease of doing business (EODB), sustaining an enabling business environment for local and foreign investors, and attracting greater and more diverse job-creating investments for more Filipinos to be gainfully employed. The group is glad that the law will be “addressing EODB issues pertaining to VAT refund, local taxation, investment approval process and flexible working arrangements, among others.”
One feature of this law that could redound to palpable benefits for business is the establishment of a 100 percent additional deduction for power expenses, to help firms cope with high power costs in the Philippines.
It also extends tax perks for strategic investments for up to 27 years from 17 years and clarifies the exemptions companies can claim for sales taxes. It also institutionalizes the allowance for up to 50 percent of employees to work from home while still keeping their incentives.
As expected, Special Assistant to the President for Investment and Economic Affairs Frederick Go hailed CREATE MORE as the country’s “main attraction tool” for foreign direct investments.
He envisions the arrival of investors — from Americans to Japanese to Koreans to Australians to British to Chinese — and they would be putting their money in various sectors, including electronics, steel, offshore wind, renewable energy and shipyard building.
We just hope that these expectations for a vibrant Philippine economy will be realized soon.
