Let’s create jobs
I can’t understand Congress. Here we are, seven months now since the CREATE (Corporate Recovery and Tax Incentives for Enterprises) bill was certified as urgent by President Duterte. Here we are now struggling to find ways to recover from the world’s worst ever pandemic. Here we are five weeks since Congress promised us it would definitely pass CREATE in September, after failing to meet previous promises. Here we are now in October, and still no CREATE bill submitted to the President.
Here we are with business struggling to survive from the decimation of COVID-19. As Finance Secretary Sonny Dominguez said, the five-percent reduction in corporate income tax that CREATE would provide will help enterprises continue and retain employees. The reorientation of incentives will also allow us “to aggressively go after the investments that will greatly benefit the Filipino people.”
Instead, with no one knowing what tax they’ll pay, the businesses that are shifting from China due to COVID-19 are going to Vietnam and our other Asean competitors.
Tied in with CREATE are the four other tax bills and the Foreign Investments Act, the Public Services Act and, the Retail Trade Liberalization Act—a package designed to attract new job-creating investments.
Then there are two bills specifically designed to help businesses recover as the restraints on society are eased: a bill to allow the government to better help distressed enterprises called GUIDE (Government financial institutions Unified Initiative to Distressed Enterprises); and the FIST (Financial Institutions Transfer) bill, to allow banks to outsource the management of their nonperforming assets to asset management companies and enable them to focus on lending to sectors in need of credit
Here we are 10 months since COVID-19 rushed onto the shores of this world, and the world’s largest companies started looking for places to which they can move some of their factories to diversify production, for more assured continuity of that production.
Many multinationals have been impacted by the virus outbreak, which is forcing firms to shift their China factories elsewhere. They are going to Vietnam, Japan, Thailand, and India. Not the Philippines.
It’s very simple. No one invests in a place where they don’t know what tax they’ll pay. No one invests when they don’t know what incentives they’ll get, at a time when other countries are tailoring theirs to entice investment to their shores.
The President has certified CREATE as a priority bill, but it’s not been given that priority. Less important measures such as a National Day of Remembrance for Road Crash Victims were enacted instead.
The delay is due to the argument over incentives. Business wants them as favorable as possible. The DOF doesn’t want to give away money, and it certainly can’t afford to as COVID-19 is draining its coffers. May I suggest that the DTI, which represents business, sit down with the DOF one final time and agree on what incentives are needed to attract business, yet won’t needlessly cost the government money it should have had? Then Congress can just accept that compromise as the fairest deal, and submit the bill to the President for signing.
They’ve had all the time needed to discuss incentives, and have done so. It’s now time to just act, and pass the CREATE bill.
There are five other bills that make up a priority package business considers essential to growing investment at a far faster rate:
• Amendments to the Public Service Act, which narrows down “public utilities” to the transmission and distribution of electricity, and waterworks and sewerage pipeline distribution systems. This way, majority foreign ownership can be attracted to other sectors serving the public.
• The Foreign Investments Act, which would lower foreign investment and employment thresholds.
• The build-operate-transfer law that would hasten the construction of desperately needed infrastructure in the country.
• Amendments to the Retail Trade Act to lower the entry level requirement for foreign retailers to $250,000.
• The Freedom of Information Act, which is needed to improve transparency in government transactions and raise the Philippines’ global anticorruption ranking—a major consideration for foreign investors when choosing where to invest.
The chambers of commerce have jointly pleaded with Congress to act. I’ve raised this before in a column more than a year ago, in July 2019. I appeal to our senators: Give us CREATE, and the rest of the comprehensive tax reform and supportive bills, now. Our economy needs to be revived, our people need jobs—desperately. Give them, please.
Erratum: Last week, I said the risk with Dengvaxia was discovered in Phase IV trials. That was not correct, it was actually discovered in the post-analysis of the Phase III trials.
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