CLARK FREEPORT — Still no relief in sight, investors here continue to appeal to government to rectify impositions that started to take away some incentives, making this Freeport and the Philippines uncompetitive compared to Asean neighbors.
Dr. Frankie Villanueva, president of Clark Investors and Locators Association (CILA) appealed to the government not to take the long route of having another Congressional act to address their appeal for corrective measures in the Implementing Rules and Regulations of Republic Act No. 11534, or the “Corporate Recovery and Tax Incentives for Enterprises” (CREATE) Act.
Villanueva made the appeal at KapiHann, a media forum of the Pampanga Press Club at Swissotel inside the Hann Casino Resorts here.
“All that is needed by the administration is to tell the Department of Finance (DOF) to harmonize the IRR with the original intent of the (CREATE) law,” Villanueva appealed.
CREATE Act reduces corporate income taxes as part of the comprehensive tax reform package. In return, it would would eventually take away special incentives like the 5 percent Gross Income Earned (GIE) in freeports, special economic zones and other investment areas.
With the IRR, Villanueva said that tax incentives and fiscal perks have been taken away ahead of the 10-year sunset or transitory provision that should be still enjoyed by locators under the CREATE Act. Some companies here are already levied Value Added Tax because of the IRR, he added.
Selling Clark
“It’s very hard to sell Clark now. It is no longer treated as Freeport,” Villanueva said.
He said that one reason for this is the “cross border doctrine which is offered around the world but has been rendered inoperative in Clark and the Philippines by the IRR.”
“It doesn’t make sense for people to be in Clark now paying premium. This has raised question why should we be in Clark when it is no longer treated as a Freeport,” he said.
“We make this strong appeal to President Marcos, utang na loob po, please instruct DOF to harmonize the IRR with the intent of the Create Law,” he furthered.
‘A lot of things going against us‘
While noting that the ASEAN has 44-percent increase in Foreign Direct Investments (FDI), Villanueva said that the Philippines has fared poorly in the 10-nation confederation of states.
Citing World Bank data, he said the Philippines only has 5 percent share of the increase while Singapore has 53, Indonesia and Thailand 11, Malaysia 9, and Vietnam 8.
Making things worse is the poor ranking of the Philippines in the World Economic Forum Global Competitiveness Index where the country is a laggard among 141 countries. The Index, he said, ranked Philippines poorly on the following:
Government ensuring policy stability (98); Cost of starting a business (106); Time to start a business (118); Insolvency recovery rate (112); Security matters: Homicide rate (111).
On the other hand, he said that Philippines, however ranked No. 1 in disaster risks.
Lost Opportunities
With the eroding competiveness of Clark brought about by the IRR, Villanueva said there have been lost opportunities.
He cited in particular a planned expansion of Texas Instruments inside the former US airbase. He said that the US company went instead to China for its planned expansion project that is five times its Clark plant.
“Locators are now paying VAT. We are now losing out to Vietnam on Korean tourist market. It’s more expensive here. How can we compete,” he added.
This also affects the local traders and the supply chain as locators would be compelled to import raw materials and other supplies instead of sourcing out locally.
He said that one big hotel project in Clark has halted its construction because of VAT impositions.
Frustrating
Clark locators are already frustrated taking the long route to rectification via another Congressional measure.
He said that the proposed CREATE MORE bill introduced by Rep. Joey Salceda at the House of Representatives may take another year to be passed into law at the very least.
“We already went to Congress three times and the hearings are always cancelled,” he said.
He said that the some legislators in both chambers of Congress who are supportive to locators and investors have already issued statements and even sponsored resolutions that call for DOF to just rectify and suspend the IRR. They include Salceda, Rep. Gloria Macapagal Arroyo, Senators Aquilino Pimentel, Risa Hontiveros.
In appealing for the IRR suspension, he said that CILA has already met with three secretaries of the DOF in the past.
For its part, executives from the office of presidential adviser on investments and economic affairs have already met with CILA in Malacanang.
PNN welcomes the side of the government administrators in Clark on the issue raised by Villanueva.
