REP. CIRIACO “ACOY” S. CALALANG
KABAYAN Party-list
Member, Good Government & Public Accountability, Tourism,
Bases Conversion, Public Order & Safety, and 12 other committees
Mobile: 0917-729-2437
TAX LAWYER-SOLON URGES SHIFT FROM FISCAL INCENTIVES
Rep. Calalang says Vietnam and Indonesia are better at attracting foreign investments
I congratulate the economic team of President Rodrigo Roa Duterte on the record-level foreign direct investments of $10 billion for the whole year of 2017. May this historic achievement spur all the economic agencies to triple their efforts.
We have a lot of catching up to do. We need to do attract foreign direct investments in new and varied ways.
Compared to some of our neighbors in Southeast Asia, the Philippines’ $10 billion in FDIs is but a fraction of their FDIs. For example in 2017, Vietnam had $35.88 billion while Indonesia attracted $32 billion. (
https://goo.gl/Z6YQ8D and
https://goo.gl/289Xvu )
New studies and analyses have shown that the old ways of enticing FDIs using fiscal incentives or tax breaks are no longer effective and even detrimental to the national economy.
The perennial complaints of prospective foreign investors and investors who withdraw their investments are: red tape, workers’ productivity, personal security of their expatriates, political stability, peace and order, and inconsistency of economic policies with every change of president and local government executives.
On red tape, Congress worked on this issue by passing its bills on ease of doing business. I hope the executive department implements well.
On workers’ productivity, I believe foreign investors are willing to pay high wages but they expect high productivity in return, which is what is happening in the BPO sector. The BPO sector is vibrant in our country because employees are well-motivated in the work. The problem with some workers in other sectors is that as soon as they become regular employees, they become lazy and less productive. This does happen and I have seen it happen in government agencies and in some private businesses.
Street crimes are concerns of foreign investors because the personal security of their employees is on the line, while white collar crimes at work are risks to business operations.
The quintuplets of political stability, peace and order, graft, and corruption remain issues in areas where communist rebels, separatists, bandits, and private armies operate, and where corrupt and incompetent officials are elected or appointed to office.
Lastly, foreign investors want to invest long-term but their investment plans and operate are upset when government policies shift whenever a new president, governor, or mayor is elected.
These are the problems that prevent us from attracting foreign investments at the levels of Vietnam, Indonesia, and other neighbors in Southeast Asia.
Finance Secretary Sonny Dominguez and his team at the DOF have the highly difficult task of rationalizing the fiscal incentives government gives to businesses.
I am open to their receiving soon their briefing on how our country’s labyrinth of fiscal incentives can be much less complicated and make the Philippine economy more attractive to foreign investments for the right non-fiscal reasons. (END)
REFERENCES:
https://think-asia.org/bitstream/handle/11540/7480/pidsdps1726.pdf?sequence=1http://www.oecd.org/mena/competitiveness/38758855.pdfhttps://itep.org/tax-incentives-costly-for-states-drag-on-the-nation/https://www.theigc.org/wp-content/uploads/2014/09/Tuomi-2012-Working-Paper.pdfhttp://www.hbs.edu/faculty/Publication%20Files/98-078_5de6b935-51b9-42c9-a741-ce36da60073d.pdfhttps://www.adb.org/sites/default/files/publication/28387/economics-wp168.pdfhttp://unctad.org/en/Docs/iteipcmisc3_en.pdfLinkback:
https://tubagbohol.mikeligalig.com/index.php?topic=89356.0
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