Even without tax incentives, the Philippines can still attract investors due to its young talent pool and ongoing infrastructure and economic reforms, said Albay representative Joey Salceda. The congressman, who is also head of Congress’s tax-writing committee, proposed the removal of the “forever” tax breaks that are the most generous in Southeast Asia, which he claimed cost Manila PHP504.2bn in lost revenues in 2017. Salceda maintained that attracting foreign investments is not about incentives but about managing the economy and the capacity to demonstrate the national strategy.
Under the Corporate Income Tax and Incentive Rationalization Act (CITIRA), which was passed on third and final reading in the House of Representatives last week, incentives will be “conditional” so that job generation will not be an “afterthought,” said Salceda. Citing figures from 2015, he said that firms in PEZA zones were granted PHP235bn in incentives and created 1.26 million jobs, the semiconductor industry was given PHP158bn in incentives and generated 345,000 jobs, while the BPO industry got PHP14bn in incentives and created 1 million jobs. Salceda said the BPO industry will lose nothing if it continues hiring, adding that PEZA zones no longer account for the bulk of foreign investments. He said investors do not come for the incentives, but for the young and mobile professionals predisposed to western culture.