With the looming enactment of the Corporate Recovery and Tax Incentives for Enterprises (CREATE), House Ways and Means Chair Albay 2nd District Rep. Joey Sarte Salceda has asked the Department of Trade and Industry (DTI) to “redouble its efforts” to help the country’s micro-small and medium enterprises generate jobs and assist the investors in creating new business opportunities.
He said the DTI’s programs towards improving the business and investment climate in the country should be intensified.
“With CREATE alone, we can create one million new jobs in the next 2 to 3 years. But we have to be very aggressive in helping businesses expand,” he said in a statement.
He described CREATE as "a much-needed shot in the arm for our pandemic-hit economy.”
"It will infuse some 39 billion pesos just this year for business expansion, while finally settling the fog of uncertainty over tax incentives. If we get this right, we can set 2021 up for very rapid recovery in the double digits. But we have to act decisively,” Salceda said.
The Salceda panel already expressed its intention to have the House plenary adopt the Senate version of CREATE.
Salceda recalled that last October, he wrote Finance Secretary Carlos Dominguez III and Trade Secretary Ramon Lopez to be apprised of the country’s plans for attracting more investment into the country.
"They informed me that we are pursuing double taxation agreement to attract more foreign investors of all sizes, and the DTI is already undertaking trade missions, but we have to go double time, because our competitors are doing so, too.”
According to the House leader, based on his calculations, the actual net present value of the infusion in private sector capital due to CREATE is as much as P5.7 trillion over the next ten years, or 38 percent of market capitalization.
"You don’t always get a policy that gives you that much private sector capital. CREATE is once in a generation,” said Salceda, a former market analyst for top global investment banks.
“That’s why when the pandemic worries ease and uncertainty fades, I expect a stock market boom in 2021. Now maybe the time to invest in resilient companies, because if the private sector can maximize the gift that is CREATE, I expect a very good earnings year in 2021, relative to this year. Maybe earnings growth would even exceed GDP growth,” he added.
The co-chairperson of the Economic Cluster of the Defeat COVID-19 AD hoc panel said it is also about time for the DTI to strengthen the Negosyo Center’s bid to formalize small businesses that are currently unregistered and are unable to benefit from existing loan programs.
“So that more businesses can benefit from CREATE and the Bayanihan bills, we really need to regularize MSMEs who are currently in the informal sector. That means making registration processes simple, easy, and free,” Salceda said.
Under his Bayanihan to Rebuild as One Act measure, Salceda proposed that the fees and charges for MSMEs seeking to become duly-registered businesses and corporations be waived.
He is also seeking the passage of House Bill No. 7698, or the proposed "Online Small Enterprise Support Services Act of 2020”. Under the bill, online businesses with less than P1 million in annual sales get cheap loans from government banks, free credit reports, grants and training from the Technical Education and Skills Development Authority and other benefits and assistance.
“Most new jobs are from online businesses. We need to help them. CREATE will help them, but if they are formal businesses,” Salceda said.
He vowed to closely work with the Board of Investments (BOI) and the ecozones to ensure the “more aggressive” promotion of the Philippines as an investment destination, as "the cloud of uncertainty due to the delayed passage of CREATE is almost over.”
Salceda projected that with right business promotion, CREATE could spur as much as US$7 to 10 billion in new additional foreign investments just in 2021.
He also expressed commitment to work with the Department of Finance to "ensure that the Fiscal Incentives Review Board (FIRB), which CREATE will strengthen as the central incentives management agency of the country, has the capacity to handle an influx of new investment applications.
“The agency is in the tax code, so it naturally falls under my purview as House tax chair. We will make sure it works,” Salceda said.