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Friday, March 29, 2024

‘Tailor-fit’ perks eyed to lure investments

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The Finance Department wants a “tailor-fit” tax and non-tax incentives to attract the right kind of investors under the new normal.

Finance Secretary Carlos Dominguez III said in a briefing he was pushing for a more proactive, targeted investment promotion strategy of directly approaching the kind of foreign investors that the government wants to relocate here and offering them a set of tax and non-tax incentives tailor-fit to their needs, as part of the efforts to reenergize the economy and create more jobs.

Finance Secretary Carlos Dominguez III
Finance Secretary Carlos Dominguez III

Dominguez said the government should discard its old “one-size-fits-all” incentives program, and shift to a demand-driven approach where it identifies the types of industries that the economy needs to flourish, so that incentives can be granted based on the specific requirements of the industry players that it wants to set up shop in the country.

These industries include those that are labor-intensive and, thus, create stable, decent-paying jobs; provide excellent technology transfers that improve the skills of the country’s workforce; and have stable markets, Dominguez said.

“What we should be doing is identifying these industries and then going to each of the companies—each of the leading companies in those industries around the world—and asking them: what do you need for you to come to the Philippines? Instead of waiting for them to apply, we should be going to them and offering them a package,” Dominguez said during the recently concluded online “Sulong Pilipinas: Youth Partners for Progress” workshop.

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Dominguez noted, for instance, that companies manufacturing microchips had a different set of needs from businesses that grow flowers for export, hence the need to tailor-fit incentives for specific industries.

He said President Duterte’s economic team and the Congress were now in the process of drawing up a comprehensive stimulus program to revive the economy impacted by the coronavirus disease 29019 (COVID-19) pandemic.

Dominguez said the obsolete “one-size-fits-all” formula of attracting prospective investors failed to make the Philippines an investment magnet, with the country persistently lagging behind its Southeast Asian counterparts in terms of the volume and amount of foreign direct investment inflows despite being among the first economies in the region to offer fiscal incentives.

On top of the massive infrastructure gap, which the Duterte administration is now fixing through its “Build, Build, Build” program, and the constitutional restrictions on foreign ownership, Dominguez said the outmoded investment promotion strategy was among the reasons why the country lagged behind in the region in terms of FDI inflows despite the Philippines’ status as one of Asia’s fastest-growing economies.

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