CLARK FREEPORT – No mass exodus, as yet, but investors have started relocating elsewhere if not putting on hold their companies’ expansion projects in this freeport.
This, as bannered in a forthcoming issue of The Horizon, the official newsletter of the Clark Investors and Locators Association (CILA) which Punto obtained before its official release.
“It is sad that some companies are now thinking twice about putting in more investments in Clark. Some of them have either made a decision or have actually started expansion somewhere else. These are lost revenues, lost economic opportunities for the Philippines,” CILA president Dr. Frankie Villanueva was quoted as saying in the story.
CILA squarely put the blame for this move of the locators to “the continuing application of Implementing Rules and Regulations of the CREATE Act and the subsequent issuance of BIR Revenue Regulations RR-21-2021, RMC 24-2022” which “has heavily impacted on sustainability of investors and locators in Clark Freeport and Clark Special Economic Zone.”
“The investors are supposed to be enjoying a sound business climate in Clark as promised them. Now they find themselves in a battle for survival due to the IRR of CREATE Act and the adverse revenue regulations,” lamented CILA chairman Cristopher Magdangal.
CILA cited a number of companies “that have suffered as a consequence of non-suspension of IRR and said BIR issuances” but asked not to be named “in order to avoid possible reprisals.” Hence, the use of the military phonetic alphabet.
Put on hold is “a new multibillion peso township” of “Alpha” company, a foreign-owned firm engaged in the hotel and tourism industry.
An ongoing hotel construction had to be discontinued as the imposition of VAT on materials has make it impossible for “Bravo” company “to scrimp on available funds.”
An established manufacturing firm dubbed “Charlie” company, “already big not just in name but also in demand and market, had to relocate to another country its multimillion-dollar expansion project.”
The planned massive resort and mixed-use district in New Clark City of “Delta” company “is also in peril as funds, secured through loans, may no longer be enough for the project.”
With the VAT levy imposed on Clark enterprises, local suppliers that comprise “Echo” company are “now opting to just purchase raw materials from abroad as they cost less even with shipping and handling fees.”
Locators have decried “uncompetitive incentives” in the freeport which they assert “pales in comparison when compared to Asian neighbors.”
The fear of possible exodus of investors from Clark has become “too real” for locators if the IRR and BIR revenue regulations remain unaddressed.
CDC victimized
In an accompanying editorial in The Horizon, CILA listed a “Foxtrot” company, directly referencing the Clark Development Corp. – the state-owned firm that manages the freeport – as “itself a victim to friendly fire from BIR as it is no longer exempt from paying VAT” and “now has to pay extra for goods and services.”
“That would definitely affect its finances. We can only hope that that won’t impact on cost of doing business in Clark through pass-on charges,” said CILA.
(This publication is open to the CDC management for its side of the issue raised, pursuant to its right of reply).
