This was the quizzical impression left by Finance Sec. Carlos Dominguez during his guesting last week at the press conference for the country’s hosting of the 51st annual meeting of the Asian Development Bank (ADB), where he neither confirmed nor denied reports that the five percent gross income earned (GIE) tax privilege enjoyed by investors in this and other freeports would be scrapped under the proposed Package 2 of the proposed Tax Reform for Acceleration and Inclusion (TRAIN) Law.
But Dominguez virtually affirmed the scrapping of the GIE privilege, which the government had been bannering over the years to entice foreign investors to come to Clark, by saying that some firms have been enjoying such privilege “too long.”
He instead cited plans under Package 2 to impose lower 25 percent instead of the current 30 percent corporate tax.
Later asked by Punto whether some firms would still be given perks, Dominguez said “yes” but added that such firms need not be located within freeports, even as he emphasized the need for investors to focus on transparency, time-bounded targets, and based on performance of investors.
“We have to modernize and make incentives more relevant to attract new industries. The work atmosphere is changing with new industries such as robotics and data analytics. Artifi cial intelligence is poised to take over lower end outsourcing services,” he noted.
Punto later asked Transportation Sec. Arthur Tugade, former president of the Clark Development Corp. (CDC), what would happen to the CDC in case GIE privileges of Clark investors are gone, he replied “I really don’t know.” CDC is the government firm that manages this freeport.
Dominguez said he expected Package 2 of TRAIN Law to be passed within this year.
Concern
Investors at Clark and Subic Bay freeports have expressed concern of the proposed TRAIN Package 2, saying it would drive away investors in their areas who were lured to invest by the off er of a mere five percent GIE.
They said some investors have already suspended plans to expand their factories and offices here and are considering establishing in either Vietnam or Cambodia.
But it’s not all bleak for Clark as Dominguez and other cabinet members touted better future for Clark not only because of plans to fully develop the Clark International Airport, but also the New Clark City in Tarlac.
“Clark captures what the Build, Build, Build Program aspires— to achieve a coherent national logistics circuit that will support our country’s rapid and inclusive development,” Dominguez said.
He said the Bases Conservation and Development Authority’s New Clark City would lure investors as will the Philippines’ first and smart and green city that will highlight real estate developments, agro-industrial park and a food processing terminal.
“NCC has a National Government Administrative Center that will ensure continuous business operations and services in the country at the onset of natural disasters,” Dominguez added.
This, even as National Economic and Development Authority Director- General Ernesto Pernia urged businesses and other stakeholders to make use of the Philippine economy’s Goldilocks period.
“Over the past two years, our economic growth is pegged at an average of 6.8 percent. This means that over the recent years, economic growth has swarmed sharply upwards and in a sustained fashion,” Pernia said.
He attributed this economic progress to the rising contribution of investment on the spending side as well as the resurgence of manufacturing vis-avis the service sector.
“Our total factor productivity has also been on the rise, making it now the fastest among the major Southeast Asian countries at 6.1 percent,” Penia said, noting a sharp increase in foreign direct investments with its bulk going into manufacturing.
“This vibrant economy translates into more and better jobs. More jobs reduce unemployment and better jobs simply mean that there are more wage and salary types of jobs that are being created compared with previous years,” Pernia added.
“Starting this year, we aim to raise this economic growth performance to between 7 and 8 percent. And I think this is achievable given that this year, you will see the phrenetic activity in the groundbreaking of several major projects as well as minor projects in the provinces and towns of our regions,” he said.
Pernia said that aside from physical infrastructure, the government is also determined to improve human capital investment through quality education and health care.
“We are also determined to initiate and sustain economic reforms. Among these, the comprehensive tax reform program is going to be completed hopefully by the end of the year. And so is the ease of doing business, the cutting of red tape to the minimum, the lifting of restrictions on foreign investment in different areas and activity of the economy,” he also said.
