CLARK FREEPORT — The Foundation for Economic Freedom (FEF) urged yesterday the Duterte administration “to seize an opportunity provided by the worsening US-China trade war to luring factories now based in China to the Philippines.”
“US President Donald Trump recently increased tariff s to the US to 25 percent of $250-billion worth of Chinese imports to the US in a sign that the US-China trade war is worsening and not bound to end soon. Consequently, many China-based factories are seeking to relocate to other countries to avoid being slapped by punitive tariff s on its exports to the United States,” FEF said in a statement.
FEF is a public advocacy organization dedicated to “advancing the cause of economic and political liberty, good governance, secure and well-defined property rights, market-oriented reforms and consumer protection.” I
ts board of trustees is composed of former Finance Secretary Roberto de Ocampo as chairman, and former Finance Undersecretary Romeo Bernardo as vice-chairman.
It said that luring China- based factories to the Philippines “will greatly boost manufacturing (and therefore, relatively higher paying jobs), result in much needed technology transfer, and increase and diversify our exports.”
“The Philippines could become an alternative destination for thousands of these factories seeking to avoid the US-China trade war. It has a highly-skilled and English-speaking workforce,” it said.
FEF said, however, that “the Philippines will have to do a lot of things to lure these factories here in large numbers.”
Thus, it urged the administration, the Senate and the House of Representatives to undertake five measures. First, it asked Congress to “immediately pass the TRAIN 2 or TRABAHO bill to remove the uncertainty about the tax regime on fiscal incentives and corporate income taxes.”
“We support the rationalization of fiscal incentives and the lowering of corporate income taxes under TRABAHO but we also support the retention of incentives for foot-loose and labor-intensive industries,” the organization said.
Second, FEF urged the passing of the Public Service Act Amendment “to liberalize foreign investment in transportation and telecommunications. The quality, cost, and efficiency of transportation and telecommunications are inputs to the decision of companies whether to relocate here.”
“Therefore, we need more foreign investment in the strategic sectors of transportation and telecommunications to bring more competition, improve services, and lower prices,” it added.
Third, FEF urged the swift implementation of the Ease of Doing Business Act, noting that “one year after its passage, the administration has yet to issue the Implementing Rules and Regulations and organize the Anti-Red Tape Authority, which is provided in the law. The Ease of Doing Business Act will simplify procedures and establish timelines in securing permits and other transactions with government.”
Fourth, FEF urged the Senate to “desist from passing the Security of Tenure bill or the Ending Endo (End of Contract) Act. It said “the Security of Tenure bill will hamper the flexibility of firms, especially in dealing with disruptive changes to businesses caused by technology. Passage of the Security of Tenure bill will not only deter China-based factories from relocating here, it will also scare away existing investors who will flee to other countries, such as Vietnam and Indonesia.”
Fifth, FEF also urged the government to “seriously and quickly implement the government’s Build-Build-Build (BBB) Program.”
It noted that “our creaky infrastructure, from ports to roads, make doing business in the Philippines costly and inefficient. We recommend that the government shift to Public-Private Partnership (PPP) where feasible but undertake projects under Official Development Assistance (ODA)) or General Appropriations Act (GAA) whenever there is no incentive for private participation. The government should also quickly make a decision on the rehabilitation and expansion of the Ninoy Aquino International Airport and the Davao airport by private companies.”
FEF warned that “the Philippines is not without competition in the contest to attract these China-based factories to relocate. Other countries such as Vietnam are moving aggressively and with lots of incentives to boot with more liberal foreign ownership laws and less onerous labor regulations. The government owes it to job-seeking Filipinos to seize this opportunity to attract thousands of factories to our shores.”
It also noted that “with or without the US-China trade war, it is imperative that the government immediately pass the TRABAHO tax reform, pass the Public Services Act Amendment into law, implement the Ease of Doing Business Act without delay, desist from passing the Ending Endo bill or the Security of Tenure Act and other unrealistic and onerous labor laws, and accelerate BBB or its bold infrastructure program.”
