Infrastructure, tax reforms in investors’ SONA wishlist

The local and foreign business community is hoping to hear more about President Duterte’s plans regarding his massive infrastructure program and tax reform package as he delivers his State-of-the-Nation Address on Monday.

The government’s delivery of its commitments under its ambitious, P8-trillion “Build, Build, Build” infrastructure buildup and the proposed tax reform package are the same issues being monitored and considered crucial by many Philippine real estate companies.

These issues, after all, will largely dictate the direction of property developments particularly outside established centers such as Metro Manila, as well as the growth of related industries such as construction, cement, and steel, among others.

Peter Angelo V. Perfecto, executive director of the highly influential Makati Business Club, said in a text message they are hoping that President Duterte furthers policies and programs that will help the country realize the theme of Asean’s 50th year of prosperity for all.

This, Perfecto said, will be best attained through several initiatives that include “infrastructure roll-out through delivery of commitments under the Build, Build, Build program.”

It can also be achieved through an aggressive and strategic focus on development of micro, small and medium sized enterprises development by addressing obstacles such as access to financing and to global markets; peace initiatives by concluding peace agreements; and forging forward with integrity and anti-corruption goals through multi-stakeholder partnerships.

Ernesto Ordoñez, president of the Cement Manufacturers Association of the Philippines (Cemap), said the group is likewise hoping that the government will pursue its “Build, Build, Build” program as it will benefit the cement industry—both the locally manufactured products and imports.

Ordoñez however cited the need to implement measures to guard against possible abuses, such as increased imports of substandard cement as the country seeks to address the growing demand for such products in light of new and upcoming infrastructure projects.

In a separate text message, John Forbes, senior advisor at the American Chamber of Commerce of the Philippines, also cited infrastructure modernization projects as one of the issues they would like to be included in President Duterte’s address, along with his support for the 12 legislative reforms of business groups and other policies “to make the economy more competitive and attractive for investment and job creation.”

Guenter Taus, president of the European Chamber of Commerce of the Philippines (ECCP), meanwhile said the group remains “fully supportive of the 10-point agenda of the President, and are excited to hear about the developments of each item during the Sona.”

A crucial cornerstone of this 10-point socioeconomic agenda is the administration’s massive infrastructure build up as this was expected to help solve the country’s lingering concerns, particularly on unemployment, high prices, and traffic woes.

Taus also said they are hoping that the President will follow through his earlier statements in further opening up the economy to foreign players.

“On the removal of the Regional Operating Headquarters (ROHQ) preferred tax and the zero-VAT rating for Philippine Economic Zone (Peza) registered companies, we strongly urge the current legislative body to keep the current business and legal framework governing the IT and business process management industry stable and unchanged especially as the dollar earnings of the IT-BPM industry and overseas workers’ remittances are the only two pillars that are keeping the country’s balance of payments healthy,” Taus further said.

The IT-BPM industry is one of the biggest drivers of growth in the office property market, but developments in the political arena are feared to thwart expansion plans and entry of more players in the outsourcing and offshoring industry.

According to Colliers International Philippines, office space absorption from outsourcing firms slowed down in the first three months of the year due largely to perceived geopolitical concerns.

Colliers disclosed that in the first quarter of the year, the combined share of BPO and knowledge process outsourcing (KPO) firms in terms of office take up in Metro Manila dropped to only 21 percent from an average of 60 to 70 percent in the past few years.