Maintaining that locators should be exempted from the Corporate Income Tax and Incentives Reform Act (Citira) bill, the Philippine Economic Zone Authority (PEZA) said the ‘misunderstanding’ surrounding the proposed measure would not have been possible had the government paid more attention to the investors’ stand.
PEZA director general Charito Plaza said several industry groups who will be directly affected by the Citira bill has had accounts of foreign investors refusing to invest or expand due to uncertainties in the tax regime.
The Citira bill seeks to reduce corporate tax rate as well as ‘rationalize’ the fiscal incentives given to investors, including the removal of the gross income earnings perk which according to PEZA is the ‘highlight’ of its incentives set that has attracted investors over the years. The House of Representatives approved the Citira bill on second reading on Monday.
In a Wednesday news briefing with representatives from the ecozone, garments, manufacturing, and information technology and business processing management industries in Taguig City, Plaza said her office still hopes to have a meeting with President Duterte to relay the industries’ concerns on the measure.
She said that PEZA has requested for a formal interview with the President five times since last year to convey its stand, but have not received any response as “seems to be there are people blocking.”
She added that she has also texted Sen.Christopher “Bong” Go in hopes of booking a meeting with the president.
“If only there was transparency, if there was participation and consultation from the very beginning, it could not have become this way that there seem to be misunderstanding or a different outlook,” Plaza said. She noted of the agency being excluded in the meetings for the measure between the Department of Trade and Industry (DTI) and the Department of Finance.
“Nobody speaks up in behalf of our people’s interest and our industries. It’s an irony because while other countries are doing their best to attract investors, here we are, investors are already here yet the feeling is we are penalizing them for investing in the country,” Plaza added.
Dan Lachica, president for the Semiconductor & Electronics Industries in the Philippines Foundation Inc. (SEIPI), said that the group has “already seen aborted expansions.” He said the lack of new products via expansion, which is especially vital to the industry, could lead to a decrease in the production and the plants’ closing down the line.
“We support the first aspect of Citira which reduces the CIT from 30 to 20 percent. Our appeal to the government, really, is exempt PEZA from the Citira bill. I can’t name the companies, but over a billion dollars have been redirected to China, Vietnam, Thailand,” Lachica said.
“There are already companies who have indicated that they are preparing exit plans; this would not have happened overnight,” he added. The lack of expansion is also seen to trickle down to employee reduction.
For their part, Philippine Ecozones Association president Francisco Zaldarriaga said the ecozone industry will be hit the most should locators rid of plans to set up shop or expand here. He said many ecozone developers acquired additional inventory following the industry’s boom, but are now faced with worries over the tax regime.
Still, DTI Secretary Ramon Lopez in a statement also maintained that the “policy direction is very clear, discussed and approved in the Cabinet and therefore mandated by (President Duterte).”
“We are for time-bound, performance-based incentives. Maybe she (Plaza) doesn’t understand that those principles are very rational economic principle is government policy makers must adhere to. After hearing the inputs from locators, we also made representations in many fora and discussed this internally with concerned agencies to have a longer transition to soften the landing,” Lopez said.