Some cross industry issues

Despite impressive statistics, current trade and investment relations the Philippines and the EU remain somewhat below their real potential. Significant policy and regulatory improvements have been made in many areas and the Philippines has managed in recent years to achieve strong economic performance.

However, important concerns remain. ECCP recommends improvements in the following key areas, which would make significant and meaningful contribution towards strengthening the Philippines’ competitiveness and attractiveness as a global investment destination to the benefit of both the Philippines and its trading partners.

Transparency and predictability in policymaking and the application of rules and regulations is regarded as essential for a stable business environment in a modern economy. As mentioned in earlier statements,  there are at least five areas where rules are threatened to be changed midstream: 1. 60:40 interpretation; 2. Review of the Mining Law; 3. The water concessions of Manila Water and Maynilad; 4. Legal and LGU/NGO interference in building the building of much  needed infrastructure; and 5. VAT Refunds, being extremely delayed and ending up in the Supreme Court — the case of San Roque Power Corp. is a problematic example as the Supreme Court ruled ‘retroactively’ rather than ‘prospectively,’  shortchanging many local and foreign investors.

Lack of clarity and transparency in policy making and in the application and interpretation of rules and regulations has been identified as a key concern in the Philippines.

Positive is that the Philippine Customs regime is being addressed and we trust that the president will sign the new Customs and Tariff Modernization Act (CMTA), passed by both Houses of  Congress, into law soon.

A competitive tax and investment promotion regime is essential. The impact that tax systems have on companies is important; therefore governments should develop tax systems which foster business investment and economic growth. Efficient tax administration can encourage the development of the private sector and the formalization of business.

Both business and government can benefit from tax systems which are simple to administer and have reasonable compliance costs. The Philippine Department of Finance and the Bureau of Internal Revenue should study bringing down the income tax level (32 percent is high in comparison to competing countries) and increase consumption taxes (VAT). One of the first things the new administration and the 17th Congress should focus on is comprehensive tax reform, bringing personal and corporate tax rates down significantly.

Several bodies are responsible for different aspects of technical regulations and standards in the Philippines; conflicting and competing standards pose concerns to business operators. Certification procedures for some industrial products are lengthy or even redundant.

There are similar concerns relating to food and drug products, particularly with regard to sanitary and phytosanitary (SPS) measures and import procedures. In light of the AEC standards and technical regulations have to be harmonized. Improvements in this respect would strengthen efficiency and reduce unnecessary costs and hindrances to business.