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 Act.

During discussions at the Rotary Club of Manila Membership Meeting on Thursday, a Rotarian who has invested in the country said the current policies of the government in terms of tax perks remain unpredictable because of the 'tug of war' between the investment promotion agencies, namely PEZA and the Board of Investments, which are all under the watch of the Department of Trade and Industry, with the Fiscal Incentives Review Board, chaired by Finance Secretary Benjamin Diokno.

He said that the reason why the Philippines is the last among the top five countries considered as top investment countries in Southeast Asia, which is now being dominated by Vietnam, followed by Singapore, Malaysia, and Cambodia.

He said in terms of exports, the Philippines is also a laggard compared to the performance of Southeast Asian counterparts.

The Philippines' total exports plummeted to $6.1 billion in July 2023, compared with $6.7 billion in the previous month. Its tough competitor, Vietnam, this August 2023 is enjoying $32.8 billion in exports.

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 policy changes.

According to Standard Chartered, 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 doesn't have clear policies for renewable energy, data centers, information technology, and artificial intelligence.

"We have yet to see concrete policy formulation and roadmap to that effect. Compared to the recent pronouncement of US President Joe Biden Vietnam will be positioned as the future chipmaker, and the US is now legislating measures to dispense funds for that purpose. There seems to be a disconnect," the investor said.

With this, PEZA's Panga admitted that there are indeed 'differences' with government agencies, particularly the DTI and the FIRB, but also sought the support of the club in PEZA's job to further attract foreign direct investments into the country.

Panga further emphasized that a whole government, industry, and society approach is needed to improve the ease and lessen the cost of doing business.

"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, Finance Secretary Diokno and Trade and Industry Secretary Pascual approved the amendment to the IRR of the Act that will resolve the value-added tax issues raised by transitory registered business enterprises.