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WE pay a
big price in encouraging investors to put up factories
and operate industries in our country.
We forgo
huge amounts of tax revenues as a result of tax holidays
and other incentives given to investors, but we do not
receive in return such benefits, such as jobs and
opportunities for our people and development for our
communities.
Our gross domestic product or GDP surged
by 7.3 percent, the highest in 31 years, and yet
unemployment continues to increase, and many provinces
are still woefully undeveloped, thus forcing their
residents to migrate to Manila and other urban centers.
Obviously, many Filipinos failed to
benefit from economic growth, and possibly reflected a
flaw in our incentives program.
But I don’t agree with those who propose
that we stop granting incentives. We need to offer
incentives to attract investments and to make our
industries competitive with our neighbors. We have not
reached that point where investors will come in whether
or not they will have tax holidays and other perks.
The main attraction for investments is
not incentives. Rather, it is the business climate in
the host country and whether it will be profitable to
operate there. Of course, incentives provide another
reason to invest in a country. Like it or not, we need
more investments to help our economy grow and improve
the lives of our people.
To carry this out, we have to
rationalize our incentives program to make it more
responsive to our needs. The guiding principle should be
that incentives be granted to investors in industries
that are labor-intensive and those that will help
develop depressed areas.
Right now, it may be that the Board of
Investments (BOI) and the Philippine Economic Zone
Authority (Peza) are giving incentives to companies that
are already here, and those that would have come in
anyway, or would not leave, whether they get incentives
or not.
This brings us to the proposed merger of
the BOI and Peza as part of incentives rationalization.
I am not particularly keen about such proposal. Their
merger is not the solution to the problem of high
unemployment rate. Such merger may be good because of
potential savings in salaries and administration, but if
the surviving entity is inutile, then we will have a
serious problem.
But I agree that we need to rationalize
the operations of government agencies that give
incentives. In addition to the BOI and Peza, other
government agencies that grant fiscal and nonfiscal
incentives include the Subic Bay Metropolitan Authority,
the Clark Development Corp. and several other offices
mandated under various laws to establish, maintain and
manage special economic and free-port zones throughout
the
Philippines.
Given the guiding principle I mentioned
above, I am pushing for the approval of Senate Bill
1640, an omnibus code detailing investments and fiscal
incentives. The legislation has been recommended by
foreign chambers and various business groups. And it has
also been identified as priority legislation for
immediate enactment by the Legislative-Executive
Development Council.
The bill proposes, among others, the
promotion of exports, whether located inside or outside
economic zones; the promotion of countryside development
and job generation by granting income-tax incentives to
investors in the 30 poorest provinces; the harmonizing
of tax-incentive packages in economic zones and free
ports; and clarify the mandate, roles and enhance the
capabilities of key government agencies.
Incentives provided under SB 1640,
which, if enacted, would replace the Omnibus Investments
Code, include reduced tax rates; duty-free importation
of raw materials used in the manufacture, processing and
the production of export products; exemption from
payment of wharfage dues and similar fees;
capital-equipment incentives; and helping facilitate
diplomatic issuances, visas and other administrative
assistance to expatriates.
I am confident that once we rationalize
our incentives program, and assuming efficient
administration of these incentives, the investments that
come into our country will really be an effective tool
in generating jobs for our people and bringing progress
to our depressed areas.
To my mind, providing jobs for
Filipinos is more significant than high GDP growth
rates. Jobs, not statistics, bring food to the table and
allow families to clothe themselves and have decent
shelter.
When that happens, then the taxes and
other revenues that we forgo will be a reasonable price
to pay to attract investments.
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