The proposed Tax Reform for Attracting Better and High-Quality Opportunities or TRABAHO law, the repackaged TRAIN 2 bill, is expected to cause uncertainty among existing and prospective investors as the measure is seen to lead to large-scale revenue reduction and job losses because of damaged investor confidence.
This was the prevailing sentiment of business leaders during the recent Kapihan sa Manila Bay held on Sept. 12 at the Cafe Adriatico in Malate.
“Many elements in the proposed TRABAHO bill clearly aim to raise revenues for the government’s infrastructure development plan but many of these elements, particularly those that reduce or even scrap certain tax incentives, may drive away foreign investors,” said Ed Cutiongco, vice president of the Petroleum Association of the Philippines or PAP.
Meanwhile, the labor group Associated Labor Unions-Trade Union Congress of the Philippines or ALU-TUCP on Wednesday expressed concern over the TRABAHO bill that may cause job losses and poor production output in the economic zones.
ALU-TUCP spokesman Alan Tanjusay cited the lack of an effective policy from the Finance department guaranteeing job and income security for workers whose jobs and livelihood would be affected once government cracked down on the companies and locators who do not comply with the implementation of TRABAHO.
“There was no safety net in place and social protection of the [Finance department] in light of incredible inflation triggered by TRAIN implementation. This will be an additional burden for the workers with the enforcement of TRABAHO,” Tanjusay said.
Cutiongco said “Although the House version of the TRABAHO bill no longer cover PD87, which gives fiscal incentives to oil and gas contractors, we in the energy sector, however, are still wary that the Senate version will retain its repeal of PD87, as in the previous draft of the TRAIN 2 law.”
“The evolving TRABAHO bill still has the energy sector concerned since oil and gas exploration and development is capital-intensive, which would require foreign investors to provide equity into projects.”
Cutiongco also said the oil and gas sector was already reeling from a low success rate brought about by the inherent low prospectivity coupled with dismal exploration activity compared with the country’s Asean neighbors.
“An example is the Malampaya Deepwater Gas-to-Power project. The TRABAHO bill may deeply affect the TRABAHO law, which will also have an impact on the communities that the Malampaya project has been serving,” Cutiongco said.
The Malampaya project is one of the most successful Public-Private Partnerships in the history of the Philippines and supplies up to 30 percent of the country’s power needs.