PH losing $3.6-B investments on gov’t 'inconsistencies' -- SEIPI

Two new potential expansion projects with estimated $400-million worth of investments and 25,000 job opportunities in the electronics manufacturing sector are feared to skip the Philippines, bringing a total of missed investment opportunities to $3.6 billion, with investors largely turned off by alleged inconsistencies in government policies.

This was bared by Dan Lachica, president and CEO of the Semiconductor and Electronics Industries of the Philippines Industries Foundation Inc. (SEIPI), during a dialogue with Sen. Imee Marcos, who was keynote speaker, at the signing of a memorandum of understanding between the Philippine Economic Zone Authority (PEZA) and the Department of Environment and Natural Resources (DENR).

“There are lots o concerns and what happened is capital flight. We have about 5 companies already to the tune of $3.2 billion that move to Vietnam, Thailand and China, move means instead of investing in the Philippines. And there is another $400 million for a total of 25,000 workers that we may lose,” said Lachica.

According to Lachica, the first five firms with $3.2-billon worth of projects have already decided to produce their new capacities elsewhere in Asia, but the two new firms with $400-million investments are still weighing their choices.

When asked by Marcos what he ascribed the capital flight to, Lachica ranked the electronics firms concerns in order of priority as – incentives rationalization, threats of government regulation with the work-from-home issue, Bureau of Internal audit, and Bureau of Customs issues.

While Lachica cited the CREATE Law for the reduction of income tax, the incentives rationalization did not sit well with the electronics sector. “Despite the belief of certain quarters,” Lachica said the incentives rationalization under the CREATE Law was “really really detrimental to investments.”

Another thing, he said, is the Fiscal Incentives Review Board (FIRB), which has reduced the effectiveness of PEZA. The work-from-home and approval of incentives for PEZA enterprises have major negative impact on investors, too. In addition, he noted of the BIR audit inconsistencies and perception of corruption in the previous government.

“These are $3.6 billion and 25,000 workers that we could have had,” he said.

PEZA Director General Charito B. Plaza, however, reported during the meeting that BIR has already suspended its audit of PEZA-registered enterprises. The BIR has been conducting inspections of PEZA-registered IT-BPOs firms if they are back in their approved ecozone location or still on WFH. The BIR said that those under WFH are going to lose their tax incentives. PEZA maintained that their BPO firms are allowed 70 percent onsite operation and 30 percent WFH.

In the same event, Jack Madrid, president and CEO of IT Business Process Association of the Philippines (IBPAP), raised the position of the industry for the FIRB to pass a resolution allowing their members to conduct hybrid work arrangement of 70 percent onsite and 30 percent WFH or remotely.