Gov’t urged to address widening trade deficit

/ 05:08 AM September 13, 2018

The Joint Foreign Chambers of the Philippines (JFC) wants the Duterte administration to address the country’s trade imbalance, a problem it pointed out could not be solved with the Trabaho bill.

In a press briefing on Wednesday, officials of foreign business groups aired their concerns over the second comprehensive tax reform package, which seeks to rationalize incentives for exporters.


The group, which speaks for thousands of member-firms responsible for more than $100 billion worth of trade in goods and services, essentially wanted the government to leave the Philippine Economic Zone Authority (Peza) “alone.”

Peza gives tax perks to offset the high cost of doing business here. The incentives attract these firms to set up shop in economic zones wherein they are required by law to export most of their goods and services.


Exporters registered under Peza account for around 70 percent of the country’s total merchandise exports, making these companies critical to the Philippines’ trade performance, according to Peza officials.

Most, if not all, of these business groups have exporters registered under Peza. Their concerns echoed with urgency the issues previously raised by Peza officials against the push for tax reform.

Some business groups have already surveyed their member-companies to see how they might react to the proposed bill, finding out that a good number of these firms were considering to pull out their investments at some point.

Ebb Hinchliffe, executive director of the American Chamber of Commerce of the Philippines (AmCham), said addressing the trade imbalance needed critical infrastructure such as better ports, roads and airports.

However, he said companies would also need incentives to set up shop here. More so, they needed these perks to stay here.

These perks, however, are now at risk under the tax package, formerly known as TRAIN 2 and now called the Trabaho bill, which wants to rationalize tax incentives despite Peza’s protests.

“I don’t want to talk about the political side of Trabaho or TRAIN 2, but again you have incentives to get people to come and invest in the country, and [to get] the ones that are already here to stay,” he said.


“I don’t think with TRAIN 2, this is going to happen. Leave Peza alone,” he added.

While the Trabaho bill will still offer tax perks such as income tax holidays of a few years, it will eventually remove the 5-percent gross income earned (GIE) tax applied to Peza-registered firms in lieu of all other taxes.

JFC held the Arangkada Fora 2018 yesterday, wherein it launched policy briefs on different issues, including one on seaports and shipping, which had a section on trade imbalance.

Having competitive fiscal incentives formed part of the group’s recommendation to address the trade imbalance.

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TAGS: ‘trabaho’ bill, Duterte Administration, Joint Foreign Chambers of the Philippines (JFC), Peza, tax reform package, trade deficit
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