The umbrella group of the country’s top economic zone developers said the second tax package of the Duterte administration would hurt foreign direct investments (FDIs).
In a statement, the Philippine Ecozones Association (Philea) warned against setbacks that might result from the passage of the tax package called Trabaho bill.
These setbacks, Philea said, included the impending loss of jobs, lower production in export-oriented firms and therefore less exports, as well as capital flight.
The ‘Trabaho’ bill has been a divisive topic lately, promising to benefit companies that cater to the domestic market while potentially hurting export-oriented firms, most of which are located in economic zones.
Formerly called TRAIN 2, the bill will rationalize fiscal incentives while lowering the corporate income tax (CIT) from 30 percent—the highest in Southeast Asia—to 20 percent.
Philea president Felix Francisco Zaldarriaga called this a “reverse” of the progress that was gained in the decades since the Philippine Economic Zone Authority (Peza) was established.
“The tax reform measures being put forth will reverse the progress that the private sector, hand-in-hand with the government, has attained thus far in contributing to nation-building,” he said.
The uncertainty over tax perks has led to the drop in registered investment pledges under Peza that would later become foreign direct investments if investor plans push through.
In the first half of the year, pledges dropped to P53.067 billion, a 55.86-percent plunge from P120.220 billion in the same period in 2017, according to Peza data.
“Disincentivizing foreign investors leaves little room for Philippine industries to pose any remaining attractive propositions,” he added.