By Bernie Cahiles-Magkilat
Foreign investors yesterday pleaded to government to leave the Philippine Economic Zone Authority (PEZA) alone warning that removing the incentives granted to enterprises operating in the economic zones would scare investors away.
The Joint Foreign Chambers (JFC) made this clear during a press conference at the 7th Arangkada Forum, which is composed of all foreign business chambers in the country such as the American Chamber, Japan, Australia-New Zealand, Korea, Canada, European Chamber, and the regional headquarters of multinational firms.
“Leave PEZA alone,” said Julian Payne, president of the Canadian Chamber of Commerce of the Philippines. Payne further noted that the reduction in corporate income tax should be accelerated to 20 percent starting next year.
PEZA offers a generous package of incentives to export-oriented companies and provides a one-stop shop to investors.
The Australia-New Zealand Chamber represented by Daniel Alexander also stressed that “PEZA brings confidence to foreign investors” and therefore there is a need to protect the integrity of this government agency.
Naoto Tago, president of the Japanese Chamber of Commerce also said that 80 percent of Japanese investors are located inside the economic zones of PEZA. Their competitiveness hinge on the kind of business environment being provided by this government agency.
“It is important for PEZA to maintain that competitiveness,” he said noting that the current ‘Trabaho Bill, which seeks to reduce incentives of PEZA will create a negative impact to investors.
Celeste Ilagan, director of the Philippine Association of Multinational Companies Regional Headquarters Inc. (PAMURI), said that business process outsourcing firms in the country support their clients all over the world. But they have been contraction in this sector because of the removal of their preferential tax under the TRAIN 1. Now, the TRAIN 2 seeks to further reduce their incentives.
“Together with the foreign chambers we advocate for the continued operation of PEZA as it is now to remain competitive with the rest of the region. We continue to be hopeful hat our please for PEZA to stay in its current form be heard,” Ilagan said.
Korean Chamber of Commerce and Industry Ho Ik Lee emphasized the sanctity of contracts. He, however, said that if there are changes in investment incentive policies, there should be a longer transition period.
Michael Reauber, chair of the committee of infrastructure and logistics of the European Chamber of Commerce, said cited the high cost of logistics in the country affecting the country’s exports and exporters, which are now reduced to a few sectors. The cost of fuel is high and some of the higher cost is due to taxation under TRAIN 1.
Atty. Kareen Fe D. Pioquinto-Enriquez, advocacy manager of EU-Philippines Business Network, noted of the restrictions of foreign investors in certain sectors of the economy particularly in the construction sector.
Meantime, Senator Sherwin Gatchalian, who chairs the Senate committees on economic affairs and energy, said he would push for the reduction of the perpetual 5 percent gross income earned of PEZA registered companies to a mere 5 years.
He allayed fears that the Trabaho Bill will displace jobs for Filipinos. He said that Senate will ensure no jobs will be lost and the bill will not create negative image on the country and the government’s contracts with investors.
“We want to make sure that this bill, as intended will make Philippines competitive with its peers by lowering down corporate income tax to 20 percent eventually,” he said.