D&L Industries, the holding firm whose subsidiaries are into food ingredients, oleochemicals, resins and related products, anticipate announcing in less than a month within-target net income at the minimum, its president and chief executive officer said.
These are all part of the package and you are not able to separate it from the package. It all comes together
That means profits to at least 10 percent higher to P3.19 billion in 2018 when the business began pouring billions of pesos to expand its manufacturing facilities in Tanauan, Batangas.
But D&L president and CEO Alvin Dim Lao has other concerns more pressing than making more money than previous, such as the need for an environment to help attract and keep more investors in the manufacturing space than is possible at present.
These concerns are nothing new but according to Lao the Philippines as an investment destination “in a lot of ways is not that competitive.”
“We need to offer more incentives to continue to attract investments, especially in manufacturing,” the Australia-educated Massachusetts Institute of Technology alumnus told the Daily Tribune.
His views on the subject are not at all antagonistic or critical of government although he speaks of the Philippines as having “the highest power cost in Asia,” “a currency that is not really convertible” and where foreign interests are barred or subjected to strict ownership limits.
According to Lao, allowing more participants in the manufacturing space does not only increase the size of the economy and create more jobs for locals but also make possible completing the value chain “starting from raw materials all the way to the finished product.”
He also said the country’s set of fiscal incentives, which are even now being prepared for long-overdue recalibration, is broadly at par with the business incentives offered by such countries as Thailand, Vietnam and Malaysia.
Still, Lao said that in many ways the Philippine fiscal incentives package for the various businesses lacks a punch.
He meant that while the fiscal perks are generally okay, such other country attributes as “infrastructure, access to capital or the conditions of the ports and airports” ought not to be separate.
“These are all part of the package and you are not able to separate it from the package. It all comes together,” Lao said.
That also means the Philippines and its economic managers simply “cannot and must not offer what every other country in the world or in Asia is offering.”
He likewise expressed reservations on the ongoing effort to expand the scope of fiscal sector reforms and that the proposed TRABAHO or the Tax Reform for Better and High-quality Opportunities bill could not be legislated early enough to matter much to the manufacturing sector at this point.
Lao said while government must endeavor to find the right balance between attracting more manufacturing entrepreneurs to solidify local output growth for the long haul and the need to generate revenues, he understands the limitations.
“I do think we need to find the right balance but we’re not there yet. And in many respect we are just not competitive, so sayang (It’s a waste),” he explained.
On the Philippine Economic Zone Authority proposal increasing PEZA locator tax liabilities to 7 percent from 5 percent at present, Lao said that has particular impact on D&L performance going forward.
Depending on how the measure is actually implemented, Lao said the increase could boost their income tax liabilities by 50 to 100 percent.
Lao is a great believer in government applying its power to tax not as a weapon but as an instrument for progress.
He abhors government adopting a blanket approach to taxing the various businesses.
“At the end of the day, if you just make a blanket policy, then those deserving manufacturing entities struggling with their finances are left in the cold,” Lao said.