MANILA — Now that the world’s two economic giants, the United States and China, are embroiled in a bitter trade war, Southeast Asian nations should exploit every opportunity to profit from this conflict, local business leaders say.
Both countries have reportedly experienced a decline in their economic growths as a result of the melee. Now, Filipino businessmen and economists see fresh opportunities in the horizon but they said legislative support is needed.
“The US-China trade war is an opportunity for Asean, and it is Vietnam that is picking up because of their incentives,” Semiconductor and Electronics Industries in the Philippines Foundation Inc. (SEIPI) president Dan Lachica said in a media interview on Thursday at the New World Hotel, Makati City.
He thus, called on policy-makers to further enhance incentives while reducing the cost of doing business.
On April 2018, the Philippines lost out to USD17.2-billion investment by Samsung due to a much better offer from Vietnam, Lachica said. Vietnam offered a significantly longer income tax holiday (ITH) compared to that of the Philippine Economic Zone Authority’s 4-6 years.
Vietnam Prime Minister Xuan Phuc, in response to Samsung’s announcement in April 2018 to continue to build more facilities in Vietnam, said that “we are willing to create the most favorable conditions for Samsung to develop in the country”.
“We will certainly lose into the max trajectory that we are looking into with 35 to 40 less growth,” lawyer Joel Domingo of Confederation of Wearable Exporters of the Philippines (CONWEP) added during the business forum.
Meantime, Ecozone firms report that tax incentives have led to the creation of over seven million jobs, accounting for more than 10 percent of the employment of the labor force, and over USD54 billion worth of exports, remitting substantial taxes to the national and local governments. One in 10 jobs available locally comes from an ecozone.
Philippine tax incentive policies have also been successful such that regional rivals for investment like Vietnam and Thailand have aggressively implemented similar policies.
“To remove or even dilute tax incentives granted to locators now would risk the loss over time of millions of jobs and investments that would otherwise have been committed to the Philippines,” quoted from a collective statement of Philippine Ecozones Association, SEIPI, IT and Business Process Association of the Philippines, and Confederation of Wearable Exporters of the Philippines.
These firms reiterate that limiting these incentives and perks will restrict ease and attractiveness of doing business in the Philippines, resulting to lower foreign direct investments and the loss of jobs for millions of Filipinos as companies transfer operations elsewhere. (PNA)