In line with business groups’ proposal to create a Cabinet-level body that will protect investors, the European Chamber of Commerce of the Philippines (ECCP) is preparing a draft bill that aims to put in place an Office for Investor Protection.
According to the ECCP, the draft bill would be pitched to Sen. Sergio R. Osmeña III as business groups were “counting on [his] support.”
The main argument for the creation of the Office of Investor Protection was that “the government should protect investors and ensure that promised incentives are duly delivered,” the ECCP said.
The Joint Foreign Chambers of the Philippines (JFC) as well as Philippine business groups first suggested the establishment such a Cabinet-level office during a dialogue with the leaders of the House of Representatives and the Senate last February.
“During the meeting, Philippine business groups and the JFC stated that, while we are supportive of government efforts to rationalize fiscal incentives and institutionalize transparency in incentive-giving, policymakers should first definitively clarify the government’s underlying philosophy on incentives. If the government will indeed make it state policy to grant fiscal perks to investors, then it must be more proactive in assisting firms to avail themselves of refunds and other incentives that they have earned or were promised to them,” Makati Business Club (MBC) executive director Peter Angelo V. Perfecto told the Inquirer in an e-mail.
“We note that there have been instances where government agencies attempt to delay or block the granting of fiscal perks to investors via technicalities and other methods. There have also been instances wherein courts have decided in favor of investors regarding the granting of incentives, only to have such a decision overturned by a higher court,” Perfecto pointed out.
In particular, business groups had been lamenting the Supreme Court ruling last year that denied the P483.8-million value-added tax (VAT) refund claim of San Roque Power Corp. based on technicalities. The Japanese-led firm was reported to be eligible for the tax perk when it put up its $1.2-billion hydroelectric power plant in Pangasinan—one of the biggest in Asia, supplying 411 megawatts into the Luzon grid.
Perfecto noted that the concept of an Office for Investor Protection “is not totally new to the Philippines as previous administrations have had an ‘investment ombudsman’ performing facilitation functions as well as overseeing graft charges filed against officials that attempt to block investments.”
“[I]n the current proposal, this Office for Investor Protection is envisioned to be a hands-on agency that will protect investors, particularly those setting up long-term facilities, against inconsistencies in national and local laws and sudden policy changes, which hamper the availment of promised incentives. The office will also proactively assist investors when they run into difficulties affecting their operations,” he said.
“Ultimately, our position is that if incentives are promised to and are rightfully earned by the investor, then the government must consider it an obligation to fully and actively assist investors in availing of such, rather than allowing certain government entities to employ various methods to block the granting of these perks. We believe that this, in tandem with other ongoing efforts at improving infrastructure, eliminating corruption and streamlining processes in starting a business will greatly assist in making the Philippines a genuine destination of choice for doing business, the effects of which will redound to the people through more jobs and high-quality and competitively priced products and services,” Perfecto said.