The Market Monitor Minding the Nation's Business
Riza Lozada
The government has assured Japanese investors that incentives offered to them for the setting up of local facilities such as tax holidays and reduced taxes and duties will be retained in an effort to encourage more investments.
President Aquino made the commitment before top executives of Mitsubishi Philippines which had set up a 50,000-unit production plant at the Special Economic Zone in Sta. Rosa, Laguna.
Mitsubishi Philippines is the longest staying automotive company in the Philippines that established in 1964 its original plant in Cainta, Rizal.
Japanese Chamber of Commerce and Industry (JCCI) Vice President Nobuo Fujii had warned that some Japanese locators in the country may reduce their investment plans if the government pushes through with its plan to cut fiscal incentives.
“There will be less investment in the future. We don’t want any change in existing incentives, especially in Peza [Philippine Economic Zone Authority],” Fujii said.
The Department of Finance (DoF) has been seeking the streamlining of fiscal perks as part of measures to boost government revenues. The World Bank said earlier that the government is losing P200 billion annually by giving out various fiscal incentives to local and foreign investors.
“This Sta. Rosa Plant represents the beginning of a new chapter in our shared history. Completed just last month, the plant has a production capacity of up to 50,000 units per year, and is expected to employ up to 1,150 individuals over the next six years. It will be crucial in helping you achieve your goal of reaching 100,000 units in sales annually by 2020,” Aquino said during the event.
“I look forward to hearing about further expansions and Mitsubishi plant inaugurations in the future. By that time, I will probably no longer be invited to events like these as President; but rest assured, I will still cheer you on as a private citizen,” Aquino said.
Aquino also gave commitment of encouraging more investments in automotive production.
“Rest assured that, in all other aspects, government will continue to do its part to fulfill your goals. To stimulate the Philippine automotive industry, our government has likewise continued to provide incentives in the form of income tax holidays and reduced taxes and duties, amongst others,” he said.
This, together with other endeavors, seeks to formalize our drive and our approach to encourage more investments into automotive assembly and parts manufacturing, in order to move the Philippines up the value chain and create even more opportunities for Filipinos,” he declared.
The President also received a business delegation from the JCCI led by Aiko Mimura, chairman of the chamber and the Nippon Steel and Sumitomo Metal Corporation. The JCCP with 60-businessman delegation paid courtesy visit to the President and attended several business meetings with local counterparts.
The courtesy visit in Malacanang was attended by Japanese Ambassador to the Philippines Kazuhide Ishikawa and the Japanese embassy’s trade and commerce attaché Junichiro Suzuki.
Also present during the courtesy call were Transportation Secretary Joseph Emilio Abaya, Trade Secretary Gregory Domingo, and other officials of the Department of Trade and Industry.
This January, the Embassy of Japan in the Philippines reported that the ninth meeting of the sub-committee on the Improvement of Business Environment under the Japan-Philippines Economic Partnership Agreement (JPEPA) was held on 23 January 2015 in Manila.
Ambassador of Japan, H.E. Kazuhide Ishikawa,and Undersecretary of the Department of Trade and Industry (DTI), Hon. Adrian S. Cristobal, Jr., co-chaired the meeting.
Representatives from various Philippine government agencies, Embassy of Japan in the Philippines, Japan International Cooperation Agency (JICA), Japan External Trade Organization (JETRO) and Japan Bank for International Cooperation (JBIC) attended the meeting. The private sector was represented by Mr. Yoshio Amano, President, Japanese Chamber of Commerce and Industry of the Philippines, Inc. for the Japanese side and Mr. Jake Ogana, Program Officer, National Competitiveness Council (NCC) for the Philippines side.
The embassy report said, “during the meeting, both sides of the panel noted encouraging progress in some agenda topics; the most recent of which was Importer Clearance Certificate (ICC).
In addition, issues discussed in the meeting included retroactively imposed VAT refund procedures, electricity shortage in 2015, port congestion in Manila and automobile incentives.
A review of issues that were raised in the previous discussions was also done such as inconsistency between national tax incentives and local taxes, application procedures of reduced tax rates under the bilateral tax treaty, taxes on foreign maritime transport services, additional surcharges introduced by Subic Bay Metropolitan Authority (SBMA), promotion measures for utilization of Batangas port and Subic port and deregulation to render the Philippines a Human Resource Development (HRD) hub.
“JPEPA, which entered into force in December 2008, is an important framework for enhancing economic ties between the two countries. Both sides noted that recent trade and investment figures are very encouraging. The existence of JPEPA has successfully promoted Japanese investment to the Philippines. The abundant, diligent, and English-speaking workforce in the Philippines is finding jobs in and out of the country, helping Japanese companies’ overseas expansion. Such win-win relationship is expected to be further fostered by frequent bilateral summit meetings, Japan’s on-going cooperation in Typhoon Yolanda relief and rehabilitation, support for peace and development in Mindanao as well as other Official Development Assistance (ODA) projects,” the report said.
“Among the JPEPA framework, the Sub-Committee on Improvement of Business Environment serves as an important forum for dialogue between public and private sectors of both countries to discuss specific issues in order to ensure transparent, predictable and consistent business environment. This regular semi-annual dialogue with parties concerned is indispensable for further improvement of business environment,” it said.