The Semiconductor and Electronics Industries in the Philippines Foundation Inc. (SEIPI) said it is hoping to meet with the Office of the President (OP) to address the issue on incentives rationalization to help attract more investments and be at par with Philippines’ Asean neighbors.
Foremost among the issues being faced by the major organization of foreign and Filipino electronics, according to SEIPI President Danilo C. Lachica said is the incentives rationalization in the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE).
“With the high operating costs in the Philippines, we’re at a disadvantage when you compare us to our neighbors Vietnam, Thailand, and Malaysia, who have been significantly more successful in attracting FDIs [foreign direct investment],” Lachica said in a televised interview on Wednesday.
With this, the SEIPI chief said, they are still hoping to talk to the OP. However, he said, they have spoken with the Departments of Trade and Industry and Finance.
“Hopefully we can get an audience with the Office of the President to explain to them what’s going on and to review the incentives rationalization to attract more investments at par with our Asean neighbors,” Lachica noted.
The head of SEIPI has been prodding the government since last year to revisit the incentives rationalization in the CREATE law, saying it has led to diversion of expansionary plans from the Philippines to other Asian countries.
Lachica said the problem is “we are not seeing as much new product and technologies invested in the Philippines.” He added that there are some but “they are few.”
He said if one is a CEO of a multinational firm, “you’re gonna make decisions of where you will place new products and technologies. And this will be in sites where your cost of operations will be low, considering the impact of the incentives as well.”
“If we are not seeing new products, new technologies, as much as we’re used to, what’s going to happen is when these existing products are eventually going to be obsolete,” Lachica said.
He also noted that the 3 million direct and indirect workers or $49 billion exports that SEIPI has are “not going to be at the same level as we know today.”
The SEIPI chief also emphasized, “The time is ticking,” adding, “We’ve got 8 or 9 years for this transition period. It is not too late for the government to review where we’re at and hopefully, implement mitigating measures, corrective actions, in place.”
Last month, Lachica said a battery manufacturer was “going to build an expansion in Asia.” However, he said, “Unfortunately they chose Malaysia instead of the Philippines.”
He said this has been the trend because of some parts of the incentives rationalization in the CREATE law that need tweaking.
Last July 2022, the SEIPI chief underscored that there were about $3.2 billion of investments that could have gone to the Philippines but have instead been moved by multinational firms to other countries, including Vietnam, Thailand, Malaysia, and China due to issues on the CREATE law, particularly the rationalization of incentives.