DTI execs want to keep investor incentives intact

Published by rudy Date posted on November 2, 2010

MANILA, Philippines— The Department of Trade and Industry aims to secure around $8 billion in foreign direct investments for the country—the same level now enjoyed by Vietnam—stressing the importance of incentives in convincing investors to locate to the Philippines.

In a briefing Tuesday, Trade Secretary Gregory Domingo said the $8-billion FDI target should be attained over the next three to five years.

“This can be achieved with the right policies and infrastructure in place,” Domingo told reporters, adding that incentives would play a significant part in the decision of foreign groups to invest here.

Asked about the DTI’s stand on the Department of Finance’s plan to remove income tax holidays (ITH) currently enjoyed by qualified investors, he said there were “internal discussions” on the matter, but nothing final had been decided at this point.

“We’re in good terms with the DOF. We’ll discuss with them the proper levels of incentives,” Domingo said. “If the ITH is removed, it has to be replaced with other incentives that are competitive for the region. We have to look at the overall incentives master plan.”

He admitted that the government might have been “too lax” in granting incentives to “unnecessary sectors and companies” in the past.

“It makes sense to tighten the rules a bit. It’s useless if we just keep giving incentives to companies that have already invested here,” he said.

According to Domingo, the trade department’s stand is “not much different from the DOF, and the DOF’s stand is not much different” from DTI.

“We both want to enhance development in the Philippines. We have to balance economic development with reducing the budget deficit. I think the ITH rules should be flexible enough,” he explained.

Apart from incentives, other big factors that would affect foreign firms’ decision to invest here included power cost, infrastructure, governance, and peace and order, he said.

Right now, government agencies that have anything to do with these issues are working double time to address these concerns, Domingo said.

Another factor that will determine the country’s attractiveness as an investment destination is its ranking in global competitiveness surveys, he said.

“We should improve our standing over the next two to three years in a significant way. We should get to the midpoint within three to four years, and to the top 30-40 percent within six years,” Domingo said.

The country placed 83rd among 139 economies, according to the latest Global Competitiveness Report released by the World Economic Forum. –Abigail L. Ho, Philippine Daily Inquirer

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