The Philippines just missed more than $3 billion worth of potential investments in the electronics manufacturing industry.
According to the Semiconductor and Electronics Industries in the Philippines Foundation Inc. (SEIPI), five companies in the electronics manufacturing industry have diverted to China, Thailand, and Vietnam for their projects worth $3.6 billion.
“This is $3.6 billion, 25,000 workers that we could have had,” SEIPI president Dan Lachica said.
The reason, according to Lachina, is the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, particularly the rationalization of fiscal incentives. This is because the grant of incentives is now performance-based, targeted, time-bound, and transparent.
Under the CREATE Act, qualified exporters will be able to enjoy four to seven years of income tax holidays (ITH), followed by 10 years of five percent special corporate income tax or enhanced deductions under the law. Meanwhile, domestic enterprises will be able to enjoy four to seven years of ITH to be followed by five years of enhanced deductions.
Lachica also said that PEZA’s effectiveness was greatly reduced when the Fiscal Incentives Review Board (FIRB) was designated to oversee the grant of incentives for projects with investments amounting to more than P1 billion.
The Semiconductor and Electronics Industries in the Philippines Foundation Inc (SEIPI) is coming up with suggestions for legislative changes to avoid missed investments like this.
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