Foreign groups see 700,000 job losses in CITIRA’s 1st year

by Mary Grace Padin (The Philippine Star) – Sept 25, 2019

MANILA, Philippines — The proposed fiscal incentive system under the Corporate Income Tax and Incentive Rationalization Act (CITIRA) bill may lead to 703,000 job losses in the first year of its implementation, according to the Joint Foreign Chambers (JFC) of the Philippines.

“We project, from the industry associations that are with me today, a job loss of 121,000 direct jobs in the first year of CITIRA if it’s implemented as it is, and indirect job loss of 582,000, for a total of around 700,000 jobs,” the JFC, represented by American Chamber of Commerce senior adviser John Forbes, said during a Senate Ways and Means Committee hearing.

Forbes said the CITIRA bill destroys “a highly successful incentives system” that have benefited foreign investors, enabling them to create 202 million direct jobs and eight million indirect jobs in the Philippines.

He said if the current system is maintained, and if the industry sector continues to grow at five percent to 10 percent, the Philippines may still be able to create one to two million additional direct jobs and four to eight indirect jobs over the next 10 years.

Forbes also said that fiscal incentives compensate for the other concerns of foreign investors, such as high costs for labor, logistics and power.

In response to the JFC’s concerns, Trade Secretary Ramon Lopez said the Department of Trade and Industry (DTI) acknowledges that the CITIRA bill poses risks of job losses, that’s why it is pushing for a longer transition period under the law.

Finance Undersecretary Karl Kendrick Chua, for his part, urged investors to consider aspects of the Philippine business climate, instead of solely looking at incentives.

“What we have presented now are the following: within the tax reform, we have the lowering of the corporate income tax rate from 30 to 20 percent. That is the biggest incentive we’re giving everyone – micro, small and medium or large (enterprises) – and that will create the 1.6 million jobs that we estimate,” Chua said.

“Second, we are providing an adjustment period and we are listening to those who want a longer one to see if it will work for us,” he said.

Furthermore, Chua said the proposed system rewards proper business activities by providing incentives to firms which create jobs, train their personnel and invest in research and development.

“Outside the tax reform, we already passed Ease of Doing Business to address the concerns of MSMEs, we passed the rice tariffication to lower labor cost, we passed Murang Kuryente to lower power cost,” the DOF official said.

Lastly, he said the Duterte administration is now implementing the Build Build Build program.

“So when investors and businesses look at the whole package and not just one thing they don’t like, I think they will see the benefit of how all of these will create jobs and not affect the jobs as many claim to be,” Chua said.