SONA bills filed in House

MANILA, Philippines - Bills rationalizing fiscal incentives and abolishing the Cabotage Law – both pushed by President Aquino in his State of the Nation Address (SONA) on Monday – were filed in the House of Representatives.

Cagayan de Oro Rep. Rufus Rodriguez filed House Bill 1788 seeking to improve the incentive systems for investors.

Rodriguez also filed House Bill 1789, which seeks to allow foreign vessels to engage in coastwise trade in the country.

HB 1788 was approved at the House during the 15th Congress but it was not acted upon by the Senate.

Rodriguez said Aquino pushed for the passage of the bill as a means to help improve the economy and “continue the momentum of change” that his administration started.

“This bill seeks to streamline the tax breaks for businesses in order to maximize the use of available funds and not to abuse the incentives given by the government by stopping the practice of having perpetual perks for several industries,” Rodriguez said.

“This bill will also provide for an investment policy that will improve the country’s investment programs and strategies but at the same time ensuring that no industry will unjustly benefit from the incentives that will be provided,” he said.

Rodriguez said the bill also grants tax breaks to exporters and limits the income tax holiday for domestic enterprises to four years.

The measure also seeks to reorganize the Board of Investments.

HB 1789 or the proposed Coastwise Trade Act of 2013 seeks to repeal certain provisions of the Tariff and Customs Code, and Republic Act 9295 or the Domestic Shipping Development Act of 2004, banning foreign vessels from engaging in coastwise trade in the country.

Coastwise trade is reserved only for national flag carriers. Foreign vessels are only allowed to pick up cargo at one local point and then depart for the international port of destination.

Foreign vessels are prohibited from transporting domestic cargo between two ports in the country.

“The cabotage policy limits competition and encourages inefficiency among local vessel operators since foreign vessels are not allowed to pick up local cargo for delivery to another port within the Philippines,” Rodriguez explained.

“Local vessel operators are not forced to compete in terms of freight cost and service quality with international vessel operators,” he said. “This barrier in foreign trade must be eliminated.”