Finance Secretary Carlos Dominguez III has called on Japanese companies to invest more in the Philippines’ fast-growing economy, where higher consumer demand fueled by tax reform and an aggressive infrastructure program, along with improving peace and order, open wide business opportunities for foreign investors.
Dominguez likewise assured a delegation from the Kansai Economic Federation (KANKEIREN) based in Osaka, Japan that the second package of the Duterte administration’s tax reform program, which aims to cut the corporate income tax (CIT) rate and rationalize investment incentives, will be a gamechanger that would expand, rather than curtail, opportunities for them to do business in the Philippines.
Fiscal incentives under the tax reform program, Dominguez said, would not be removed but would instead be rationalized or improved to ensure that these are performance-based, targeted, time-bound and transparent.
“Rather than look at the effect of tax reform on some companies, look at the effects of tax reform on the entire economy because it is making it better. Instead of looking at the place where you might lose, look at opportunities in the larger economy,” Dominguez said during his recent meeting with KANKEIREN members led by their chairman, Masayoshi Matsumoto.
Matsumoto, who is also the chairman-CEO of Sumitomo Electronic Industries, said he is “very satisfied with the explanation” of the Finance chief about the need to rationalize fiscal incentives in the country.
Also at the meeting were, among others, Japanese Ambassador to the Philippines Koji Haneda; Masayuki Matsushita, KANKEIREN vice chairman and chairman of its International Committee, and vice chairman of Panasonic Corp.; Takamune Okihara, special advisor, KANKEIREN and senior advisor at MUFG Bank, Ltd; and Koji Yanagida, vice chairman of the International Committee and executive director of Azusa Sekkei Co., Ltd.
“We would like to point out that actually, our economy is growing very quickly. If you want to participate in the local economy, you have to better invest here,” Dominguez said. “We’d like to make you feel welcome, but what will make you feel welcome is the improving disposable income of our people, improving infrastructure, improving peace and order, and I’m sure many Japanese companies can certainly benefit here.”
Dominguez said the current system of fiscal incentives despite being “the longest and most generous” among the ASEAN economies, have not attracted more investors to the Philippines, which remain among the lowest recipients of foreign direct investments (FDI)s in the region.
Investors are more concerned with the country’s poor infrastructure, which drives up logistics costs, Dominguez said, as he pointed out that this is among the reasons why the Duterte administration has been investing heavily in its “Build, Build, Build” program as well as spending more on education and healthcare to develop the country’s human capital.
