By Mario B. Casayuran
Senator Imee R. Marcos, chairwoman of the Senate economic affairs committee, on Monday urged the Duterte administration to move quickly to attract manufacturers planning to relocate from China to other Asian countries in the country’s post-quarantine economy.
Marcos cited the emerging trend of factory relocations from China, as Japan, the United States, and the European Union (EU) are planning to transfer production of their crucial imports from the mainland due to supply shortages amid the coronavirus disease (COVID-19) pandemic.
The lady lawmaker from Ilocos Norte said even Chinese manufacturers are planning to relocate to neighboring countries to evade high tariffs imposed by the United States on China-made goods produced for large American companies like Apple, Google, and Microsoft.
“The Philippines has a competent workforce and a command of English that removes language barriers felt in other Asian countries, but our economic managers must study more closely and quickly the incentives offered by Vietnam, Thailand, Malaysia, and Indonesia, which are ahead in the race to attract foreign investors,” Marcos said.
Marcos called on her colleagues in Congress to amend the Foreign Investment Act via Senate Bill 1024 to set up an Investments Promotion Council and add “long-delayed incentives” for foreign investors.
Among the incentives in the Marcos bill are to raise foreign ownership limits, lower the US2.5-million capital requirement to set up operations, and simplify requirements for all national-level permits. The bill also seeks to criminalize wrongdoing related to their procurement.
“The emerging economic trend and opportunity amid Covid-19 also call for a second look at the CITIRA (Corporate Income Tax and Incentives Reform Act),” Marcos said, citing that the proposed 10-year period to scale down corporate income tax from 30 percent to 20 percent may “miss the boat.”
Indonesia is cutting its corporate income tax from 25 percent to 20% by next year, Marcos said.
The government must also take a cue, Marcos added, from other Asian countries like India, a competitor in lower-value manufacturing and business process outsourcing (BPO), which has already cut corporate taxes to as low as 15 percent for the 2019-2020 financial year and has been actively negotiating with potential Japanese investors and foreign chambers of industry.
“The resulting CITIRA bill must keep manufacturing companies and BPOs from leaving our export zones, while being able to take advantage of the impending exodus of factories from China,” Marcos said.