Joining RCEP is a must (1)
This Congress has understood what business needs to grow and prosper and, to a commendable extent, has given it to them. Since 2019, the 18th Congress, with the urging of the President, has passed at least five remarkable laws that have changed the business landscape. That indicated “we’re not just making promises, we’re giving you what you need to be globally competitive.”
The latest that got the crowd cheering was Republic Act No. 11659 or the amendments to the Public Service Act (PSA). The PSA redefines what an 86-year-old law said about public utilities. Under the new measure, public utilities will be limited to entities that operate, manage, or control: (1) distribution and transmission of electricity, (2) petroleum pipeline transmission systems; (3) water pipeline distribution systems and wastewater pipeline systems; (4) seaports; and (5) certain classes of public utility vehicles.
For everything else, such as telecommunications, shipping, airlines, airports, expressways, tollways, subways, we now welcome foreigners to bring in their expertise and money, and help us build a nation. They’ll bring competition to the field that will benefit us all.
Also approved by President Duterte is RA 11647, a law amending the Foreign Investments Act, which will allow foreigners to own 100 percent of more domestic market enterprises, except for industries on the foreign investment negative list. It will also reduce the number of required local direct hires for foreign firms from 50 to 15 workers.
Other laws that were passed since 2019 were RA 11595, the law amending the retail trade liberalization law that lowered the entry level for foreign retailers to P25 million from its previous limit of P125 million ($2.5 million), bringing competition to the big boys. It doesn’t hurt the mom and pops at all. Maybe it even helps them with a wider choice of products at world prices.
Then, there’s RA 11534 or the Corporate Recovery and Tax Incentives for Enterprises Act, which lowered corporate income taxes from 30 percent to 25 percent for corporations, and 20 percent for micro, small, and medium enterprises. It also rationalized the fiscal incentives system based on industry and location of investment.
Giving banks more flexibility is RA 11523 or the Financial Institutions Strategic Transfer (FIST) Act, which allows financial institutions to sell their nonperforming assets, including loans, to asset management corporations called FIST corporations.
But there are some bills yet unfinished that are needed to complete the package. And if Congress will continue the support for an improved economy it has exhibited so far, it should pass them when Congress resumes on May 23 to June 3. They have two weeks to complete the laudable job they’ve started, and such completion is needed by the next president to create the jobs all these laws promise.
They are the amendments to the build-operate-transfer law, the Passive Income and Financial Intermediary Taxation Act, the Real Property Valuation Reform Act, and the open access in data transmission bill.
Then, there’s one that overrides them all: the Regional Comprehensive Economic Partnership (RCEP). As everyone who knows anything about it has said, this is a game-changer.
RCEP is a 15-member free trade deal that accounts for one-third of the world’s economy, one-third of the global trade, and a market of 2.3 billion people. It also covers 50 percent of the global manufacturing output, 50 percent of the global automotive products, and 70 percent of electronic products. RCEP member economies also account for 51 percent of the Philippine export market, 68 percent of the country’s imports, and most importantly, is a 58-percent source of the country’s foreign direct investments.
The future success of the Philippines depends on it being in RCEP. With this agreement, there will be more open borders (thereby lower costs and faster shipment), freer investment rules (PSA comes in here), and easier people movement. It’s all a plus for the Philippines.
RCEP took effect last Jan. 1 for member economies that ratified the agreement. As it is now, this mega free trade deal is in place in 12 countries that have ratified it. We still haven’t. Why must we so often be behind our neighbors in what we do? Is it a masochistic desire to strive to be at, or very close (see my column “Bottom,” 09/16/2021) to the bottom in everything we do?
The Senate must ratify RCEP.
More next week.
