PEZA chief understands investors’ dilemma
Panga admitted that there were indeed ‘differences’ in terms of policies among government agencies, particularly the Department of Trade and Industry and the Fiscal Incentives Review Board.
Daily TribunePanga admitted that there were indeed ‘differences’ in terms of policies among government agencies, particularly the Department of Trade and Industry and the Fiscal Incentives Review Board.
PEZA Director General Tereso Panga (left) delivers a speech being the keynote speaker during the Membership Meeting of the Rotary Club of Manila on Thursday at the Manila Polo Club in Makati City. | Photograph by Joey Sanchez for the Daily Tribune
The director general of the Philippine Economic Zone Authority said he understands the clamor of investors with regard to tax perks and incentives, which is why it's only right that the government has finally decided to amend the implementing rules and regulations of Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
During discussions at the Rotary Club of Manila membership meeting last 5 October 2023, a member of the Club who is an investor in various sectors locally said the current policies of the government in terms of tax perks were unpredictable because of the "tug of war" between the investment promotion agencies, that is, PEZA and the Board of Investments, which are both under the watch of the Department of Trade and Industry, and the Fiscal Incentives Review Board, chaired by Finance Secretary Benjamin Diokno.
Last among five countries
He said that explains why the Philippines is the last among five countries considered by investors as investment destinations in Southeast Asia, with investments now being dominated by Vietnam, followed by Singapore, Malaysia and Cambodia.
The Rotarian said in terms of exports, the Philippines is also a laggard compared to the performance of the country's Southeast Asian counterparts.
Total Philippine exports dropped to $6.1 billion in July 2023, from $6.7 billion in the previous month.
In comparison, Vietnam in August 2023 enjoyed $32.8 billion in exports.
Most attractive destination
Vietnam is now considered Southeast Asia's most attractive destination for foreign investors because of its favorable business environment, steady economic growth, improved infrastructure and pro-foreign investment policy changes.
According to Standard Chartered Bank, Vietnam's advantages to being the top tourist destination are in terms of labor, global trade integration, supply chains, political stability, and potential resources, with the government committed to promoting trade and sustainable growth.
Unclear policies
Another issue that was being questioned by some investors, according to the Rotarian, is the realization of the Fourth Industrial Revolution which also doesn't have clear policies for renewable energy, data centers, information technology and artificial intelligence.
"We have yet to see concrete policy formulation and a roadmap to that effect, compared to the recent pronouncement of US President Joe Biden that Vietnam is positioned as the future chipmaker. The United States is currently legislating measures to dispense funds for that purpose. There seems to be a disconnect," the investor said.
Regarding this, PEZA's Panga admitted that there were indeed 'differences' in terms of policies among government agencies, particularly the DTI and the FIRB.
Still, Panga sought the support of the oldest and first Rotary Club in Asia where it concerns PEZA's job to further attract foreign direct investments into the country.
Panga emphasized that a whole government, industry, and society approach is needed to improve and lessen the cost of doing business.
Eco-zoning push
"Through our collaborations and strategic alliances, PEZA, together with the Rotary Club of Manila, other ecozone industries, and stakeholders, will continue to push for eco-zoning the Philippines towards inclusive and sustainable development," he added.
Last August 2023, Finance Secretary Diokno and Trade and Industry Secretary Pascual approved the amendment to the IRR of the CREATE Act that will resolve the value-added tax issues raised by transitory registered business enterprises.
