Imee: Time To Hustle, As Factories Pull Out Of China
New jobs can be made in the country’s post-quarantine economy if the government moves quickly to attract manufacturers planning to relocate from China to other Asian countries, Senator Imee Marcos said.
Marcos, who chairs the Senate committee on economic affairs, cited the emerging trend of factory relocations from China, as Japan, the United States, and the European Union are planning to transfer production of their crucial imports from the mainland due to supply shortages amid the Covid-19 pandemic.
Even Chinese manufacturers are planning to relocate to neighboring countries to evade high tariffs imposed by the United States on China-made goods produced for large American companies like Apple, Google, and Microsoft, Marcos added.
“The Philippines has a competent workforce and a command of English that removes language barriers felt in other Asian countries, but our economic managers must study more closely and quickly the incentives offered by Vietnam, Thailand, Malaysia, and Indonesia, which are ahead in the race to attract foreign investors,” Marcos said.
Marcos is pushing to amend the Foreign Investment Act via Senate Bill 1024 to set up an Investments Promotion Council and add “long-delayed incentives” for foreign investors.
Among the Marcos bill’s incentives are to raise foreign ownership limits, lower the USD2.5-million capital requirement to set up operations, simplify requirements for all national-level permits, and criminalize wrongdoing related to their procurement.
“The emerging economic trend and opportunity amid Covid-19 also call for a second look at the CITIRA (Corporate Income Tax and Incentives Reform Act),” Marcos said, citing that the proposed 10-year period to scale down corporate income tax from 30% to 20% may “miss the boat.”
Indonesia is cutting its corporate income tax from 25% to 20% by next year, Marcos said.
The government must also take a cue, Marcos added, from other Asian countries like India, a competitor in lower-value manufacturing and business process outsourcing (BPO), which has already cut corporate taxes to as low as 15% for the 2019-2020 financial year and has been actively negotiating with potential Japanese investors and foreign chambers of industry.
“The resulting CITIRA bill must keep manufacturing companies and BPOs from leaving our export zones, while being able to take advantage of the impending exodus of factories from China,” Marcos said.