Passing the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill into law will be critical in attracting foreign investors to do business in the Philippines as the country pushes for economic recovery amid the coronavirus pandemic, a trade official said.
At the virtual European-Philippine Business Summit on Friday, Department of Trade and Industry (DTI) Undersecretary Ceferino Rodolfo said a better version of the bill that would be welcomed more by investors would help get more foreign direct investments (FDIs).
“I think we already have a good framework,” Rodolfo said. “Hopefully, as this gets discussed furthermore prior to the resumption of the plenary session on November 9, we come (up) with a much better version,” he added.
Rodolfo added that passing the CREATE bill would dispel doubts among investors over the country’s incentives regime.
“I think the past two or three years, that has been the biggest stumbling block in terms of attracting investors,” Rodolfo said.
He noted that while the CREATE bill would help lure investments in the short run, other bills need to be passed to address long-term structural issues.
“We need to pass the longer-term reform measures on Public Service Act, Retail Trade Liberalization, and Foreign Investment Act,” Rodolfo said, adding that these bills pending in Congress are priorities of the DTI and the administration to gain more FDIs.
CREATE proposes to reduce the corporate income tax to 25 percent from the current 30 percent, and seeks to rationalize incentives currently enjoyed by select firms especially those located in economic zones.
Presently, the Philippines has one of the highest corporate income taxes among member-states of the Association of Southeast Asian Nations.
While the CREATE bill is still pending in Congress, latest data from the Bangko Sentral ng Pilipinas showed July FDI inflows went up by 35.2 percent to $797 million from $590 million in the same month last year.
“The FDI net inflows rose for the third consecutive month on the back of investors’ improving sentiment due in part to easing of containment measures, and some signs of gradual improvements in economic activity based on high-frequency indicators,” the BSP said in a statement.
The central bank said the increase in net inflows during the month was mainly from net investments in debt instruments that grew by 60.1 percent to $643 million from $402 million a year ago. PNA AND SOVEREIGNPH