At the recent 10th Asia Summit in Singapore, President Marcos once again invited foreign businessmen to consider investing in the country, especially given the strong fundamentals of the Philippine economy.
He said the Philippines’ strategic location within Asia, coupled with its membership in regional trade agreements, positions the country as a gateway to countless possibilities.
The President also mentioned the country’s educated and English-speaking workforce, incentives, tax breaks, and robust legal framework safeguarding the interests of foreign investors, as well as protection of intellectual property rights, as among the Philippines’ strengths.
But are these enough to make the Philippines stand out as an investment destination, especially among its neighbors in the ASEAN region?
It is interesting to know that not every ASEAN country has an investment law. For example, Singapore, which is the most successful ASEAN country in attracting foreign investments, does not have one, a 2017 study by the International Institute for Sustainable Development comparing the investment laws of the different ASEAN countries revealed.
The study showed Singapore does not have a law on foreign investment or an economy-wide law governing both domestic and foreign investments. Instead, investment is governed by laws of general application such as the common law of contract and the Singapore Companies Act and by sector-specific legislation.
And Singapore still restricts foreign investments in several sectors, including telecommunications, media, banking and land ownership.
Most ASEAN countries, including the Philippines, have a negative list or areas of investments wherein foreign investments are either prohibited or restricted. Many provide incentives for new promoted investments, including income tax holidays and other tax incentives.
Another interesting discussion in that study is about Thailand’s Investment Promotion Act. This IPA is designed to prevail over other laws and to give the Board of Investment powers to grant benefits to promoted investors that would otherwise be contrary to Thai law. For example, it contains a general override provision which states that all other laws shall be replaced to the extent that they are consistent with the IPA.
Thailand’s IPA also gives its Board of Investment the power to waive limits on land ownership that would otherwise apply to a promoted investor. However, the powers of its BOI to grant immigration permits to foreign nationals associated with a promoted investor is made subject to other Thai laws on immigration.
But probably worth the Philippine government’s attention is Vietnam’s law on investments. It contains a commitment that incentives granted to an investment will not be cancelled during the life of the project subject to some exceptions.
Recently, locators inside the Clark and Subic freeports have asked the Philippine government to suspend new rules which they said are taking away their tax incentives.
They called for the immediate suspension of two issuances (Revenue Regulation 21-2021 and Revenue Memorandum Circular 24-2022) by the Bureau of Internal Revenue, saying these two BIR issuances, as well as the implementing rules of RA 11534 or the CREATE Act, effectively stopped the enjoyment of tax incentives and other fiscal perks as some investors are now charged value-added tax, among others, which is contrary to the original intent of the CREATE law.
The investors noted that the IRR and the issuances have caused massive confusion as well as substantial impairment to the cost structure, business models, and the viability of existing and potential investors.
They asked government to honor the CREATE law’s 10-year transitory provision to give ample time for these locators to restudy their business models and rethink their investment priorities.
They said that the very reason investors are coming into Clark is because of the incentives that make them very competitive. But this new inability to pass on VAT to their customers adds to the burden on locators, apart from the high cost of utilities and red tape. If they register for VAT, their cost becomes 12 percent higher with VAT, they added.
The OECD, in a review of regulatory reforms in the Philippines released in 2020, noted that a stable investment climate is important in helping foster a more competitive economy.
It added that regulations create a range of costs, particularly when too limited, poorly conceived, redundant and incoherent.
All countries woo prospective investors with fiscal and non-fiscal incentives so these might not provide us the edge. Our government might not be able to do something about the costs of labor and power but the stability of incentives and the provision of a better regulatory environment are something that are well within its control.
Anya bags World Travel Awards
Anya Resort Tagaytay, a premier resort hotel under the management of Anya Hospitality Group (AHG) and a member of the Small Luxury Hotels of the World (SLH), has been awarded as the Philippines’ leading boutique resort in this year’s World Travel Awards.
According to Anya general manager Mikel Arriet, the award is truly an honor, especially since the Philippines houses the best resort properties on par with international brands. He added that this award is a reflection of the hard work, passion, and dedication of the entire organization to go above and beyond to ensure that guests have memorable and extraordinary experiences.
The annual World Travel Awards is renowned for celebrating hospitality excellence and recognizing the best of the best in the industry.
Nestled in 7.2 acres of breathtaking views and lush landscapes, this Tagaytay resort is a sanctuary inspired by nature and wellness, welcoming guests with signature Filipino hospitality through warm gestures and services tailored to their varying needs and preferences. All 72 suites uphold the same warmth and comfort, making it an ideal place for solo and family getaways.
Unwinding and relaxation will come easy to guests with the resort’s variety of wellness, recreation, and pampering services. A perfect complement to the cool breeze, spend a quiet afternoon lounging in the sun by its heated pool with delectable treats and refreshing concoctions. For those wishing to work out, Anya Resort features a fully equipped fitness studio to boost those endorphins. After moving around, head to Niyama Wellness Center for some of the best massages and revitalizing treatments.
The resort also offers incredibly comforting and remarkable culinary encounters, from the distinctive and captivating flair of Samira by Chele Gonzalez’s signature dishes, to poolside grub and the perfect nightcap at Anila Poolside.
For comments, email at mareyes@philstarmedia.com