Garment manufacturers want more tax incentives to help the struggling industry, urging the government to take advantage of the Chinese companies who are interested to set up shop here.
Foreign Buyers Association of the Philippines (Fobap) director Ding Buendia said there was a need for government subsidies, particularly for labor and power expenses, to bring down the cost of doing business in the country.
He added that some Chinese firms had already asked them about either setting up shop here or partnering with local factories.
“So we should take advantage (of this), we should give incentives for them to come,” he said.
The Philippine Exporters Confederation Inc. had talked about Fobap’s need for more tax perks at a time when such perks are being rationalized.
The Duterte administration is currently pushing for the Tax Reform for Attracting Better and High-quality Opportunities (Trabaho) bill, which will slowly lower the corporate income tax while revamping the tax incentive system.
“Benefits of tax incentives in the Trabaho bill should not be removed. In fact, we should give more. Subsidize power (and) labor enhancement, skills training. Garments (manufacturing) is very labor-intensive,” he said.
It is not clear at this point if Fobap was in favor or at least has some reservations about the bill. For one, the Trabaho bill already includes an option to have up to 50-percent additional deduction in labor expense if there is an increase in direct employment.
The textile and garment industry used to be competitive in the export market and was even considered a sunrise industry during the 1990s, according to the Board of Investments (BOI), an attached agency of the Department of Trade and Industry.
Export performance, however, dropped since the abolition of textile quotas by the World Trade Organization in 2005.
As a result, garment and textile enterprises in the Philippines that relied on quotas underwent difficulties, leading to the closure of factories and downsizing, BOI said.
In a press briefing in August last year, William Ang, manager of Globe Textile Industries Corp., complained about the garment industry receiving little to no support from the government.
The Philippines could have achieved more, he said. “We have a lot of talented designers. We should be the Paris of Asia but what’s happening? Never in my lifetime had the government asked what it could do to help us in the industry,” Ang said, who represented the Garments Manufacturers Association of the Philippines during that time.
For his part, Fobap president Robert Young said that once the garments sector had been revived, the Philippines could penetrate more markets, especially Southeast Asia, aside from the United States.
“The neighboring countries such as Bangladesh, Vietnam, Sri Lanka and even Myanmar are all now getting filled up. In others words, they have no more space for fresh new production and this is the time that the Philippines should open up so we get all these new ones,” he said.