Incentives key to attracting investments for firms shifting from China
Asia Pacific - Philippines: THE Philippines must improve its incentives program and remove trade obstacles to remain competitive in attracting investments, as global companies begin shifting China-based operations to Southeast Asia, international business councils said.
US-ASEAN Business Council Senior Vice-President and Regional Managing Director Michael Michalak said in a television interview on Thursday that Vietnam has been opening up to more foreign investments, taking advantage of a global supply chain shift in the region.
He said that there is interest in the Philippines, but it faces stiff competition with neighboring countries.
“When you look around at some of the issues…with investment and with some of these incentive programs, you have to compare what the Philippines is doing with other countries around the region.”
The Philippine government has recently proposed changes to the Corporate Income Tax and Incentives Rationalization Act (CITIRA), including granting “tailor-fit” incentives unique to the needs of foreign businesses, as well as immediately cutting corporate income tax to 25% from 30%. Previous versions of the bill proposed gradually reducing the rate to 20% over a decade.
“There’s a lot of uncertainty as to what exactly those (incentives) programs will be and there’s a lot of discussion going on. Hopefully very soon, many of those discussions will be finished and I hope the Philippines will have a good story to tell,” Mr. Michalak said.
Vietnam is reopening its economy after being touted as a success story for its response to the coronavirus disease 2019 (COVID-19) pandemic, reporting fewer than 300 cases with no new cases in almost a week.
In contrast, the Philippines has reported nearly 12,000 cases of COVID-19 infection, with a current daily testing capacity of over 8,000. The country has relaxed some lockdown measures and reopened some business operations in lower risk areas, while Metro Manila, Cebu City, and Laguna remain under a modified enhanced community quarantine until the end of May.
EU-ASEAN Business Council Executive Director Chris Humphrey said in an e-mail that the pandemic-driven redistribution of supply chains for companies that had previously relied on one or two investment destinations will be an opportunity for the ASEAN region, including the Philippines.
“But without the removal of key obstacles in the regions, such as overly complex customs procedures and non-tariff barriers to trade, the region, and its member-states, will not be able to fully take advantage of the opportunity before them,” he said.
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