Move to modify tax perks alarms German firms

The head of the German-Philippine Chamber of Commerce and Industry on Thursday expressed concern about government plans to modify the tax holiday regime, noting that a stable environment is critical for securing foreign investments.

“We’re concerned about this discussion to modify tax holidays. (The government should) never change the rules in the middle of the game,” noted GPCCI president Gunter Matschuck.

A stable business and legal environment is said to be critical for long-gestation projects or those that would require large capital outlays such as those in the field of manufacturing, which is what, according to Matschuck, the country needs most.

“In a not so stable legal environment, it is easy to do an immediate investment in [the] service [sector] because in service, you can pack up and  go if the legal environment changes. For manufacturing, you need a master plan, a stable environment, and a guarantee that the next government [goes in the same direction]. A little variation is normal and we must give that freedom to government,” Matschuck explained.

“It must be clear, for instance, who gets the tax holidays, when are they expiring and if [there is a] master plan. Then [companies will] definitely consider the Philippines,” he added.

Matschuck also expressed concern about the ongoing massive reform in the notoriously graft-ridden customs bureau, which began last week, as this has been hampering operations of some German companies.

According to Matschuck, there had been delays in the releases of imports and consequently, delays in production and deliveries for export.

Some companies have been operating on a just-in-time basis over the last two weeks, he added.

Officials from logistics firm Schenker Philippines Inc. and Continental Temic Electronics Phils. Inc., a supplier of automotive parts, confirmed that they have been experiencing some production delays due mainly to the revamp at the Bureau of Customs.

Officials admit that the process is necessary to weed out corruption in Philippine state agencies, but they have called on the government to ensure that the day-to-day operations of  companies will not be adversely affected with the implementation of these clean-up processes.