The Clark Investors and Locators Association (Cila) wants a strong link with the local economy as it calls for additional tax incentives to attract more foreign direct investments (FDI).
Cila President Frankie Villanueva said uncertainty of the package 2 of the Tax Reform for Acceleration and Inclusion Law (TRAIN 2), now renamed “Trabaho” bill or “Tax Reform for Attracting Better and High-Quality Opportunities,” is driving away FDI.
Villanueva made the statements during the Balitaan media forum organized by the Capampangan in Media Inc. (Cami) in cooperation with the Clark Development Corp. (CDC) at the Bale Balita here last Friday.
He was accompanied by Cila Executive Director Christian Maňalac who said he is forming an “incubating system” for start-up businesses especially designed for small and medium enterprises (SMEs).
Villanueva said they want to minimize the “friction” with local suppliers to serve locators here while at the same time “develop a strong link with them in the global value chain.”
The CILA president said the local circular of the Bureau of Internal Revenue (BIR) is making this a lot harder.
He said there are limits to the cost of goods sold, and there are numerous documentary requirements to make it VAT exempt.
“So, what happens is, they import raw materials instead,” he said.
Villanueva said Texas Instruments (TI) easily gets P20 million per month from local suppliers but they are having a hard time with all the requirements.
“The value added is minimized. Let us minimize the friction for local suppliers to serve locators,” he said. “We have a lot of multi-national companies here, but they import raw materials,” he added.
“Our concern is the fiscal incentives not only with foreign investors but also local investors because in the Bangko Sentral ng Pilipinas, there are P2 trillion special deposit accounts,” he said. “This money that they are holding. If they release it, there will be inflation, and we are paying interest on that, but if you can tap this, it is more than enough to fund all our infrastructure requirements.”
Villanueva said one of the major investors here, who doesn’t want to make an official announcement, was supposed to increase its capacity by 50 percent. But because of the uncertainty brought about by TRAIN 2, that expansion will now go to China.
“There is so much promise here in Clark, especially under this administration. If it does not come out in the way that we want it, and if the attitude of the government is to penalize investors, they might leave us or get discourage,” he lamented. “The mere uncertainty is driving them away,” he added.
“We are making an emotional appeal to the Department of Finance not to justify lowering the perks,” Villanueva said.
“First of all, let us respect all existing contracts or the grandfather rule,” he said. “One of the reasons why we have very little investments here is we are not predictable. There is shifting policies every time there is a new administration,” he added.
“No. 2 is Nolco or net operating loss carry over, which is good. Income tax holidays should be longer because our neighbors give 15 to 20 years already,” he said.
“In a nutshell, we want to be competitive with our neighbors. One of the things we enjoyed before is we have a few regional headquarters here. But because of TRAIN 1, some of them are leaving or have already left,” he said. “That is why Coke [Coca-Cola], which has been here since before, is leaving because of TRAIN 1.”
“We want to generate employment,” he added.