FOLLOWING the improvement of the Philippines’s performance in the annual World Bank Ease of Doing Business report, a leader of the House of Representatives on Thursday said the government should prepare to accommodate the “influx” of new investment and business expansion by passing several measures, such as economic Charter change (Cha-cha) and the proposed Corporate Income Tax and Incentive Rationalization Act (Citira).
Ways and Means Committee Chairman Joey Sarte Salceda said legislative and economic reforms could make the Philippines more competitive, as proven by the 29-notch leap from 124th to 95th in the annual World Bank Ease of Doing Business report.
“Because this is no longer a question of if, but when, I am also elated by this improvement because this means that when Citira is passed, the government is more ready to accommodate the influx of new investment and business expansion that we expect because of the superior incentives and lower corporate income tax rates,” Salceda said.
“The Philippines’s significant improvement in Ease of Doing Business rankings is the logical conclusion of the government’s efforts to create a business environment that truly encourages good business,” he said.
According to Salceda, the lower chamber will become a “House of Reforms” with the passage of the remaining measures under the Comprehensive Tax Reform Package (CTRP), amendments to the Foreign Investments Act (FIA), Retail Trade Liberalization Act (RTLA) and amendments to the Public Service Act (PSA).
“Pifita [the Passive Income and Financial Intermediary Taxation Act] will harmonize the tax rates on banks and financial institutions. The triplets—FIA, RTLA, and PSA amendments—will ease up medieval restrictions on investment. The Real Property Valuation Reform Act will harmonize the land market and bring clarity to real property investors. Once those reforms are implemented, the Filipino people can expect even bigger leaps in our rankings,” he said.
Ease Charter curbs
Salceda, an economist, said easing restrictive economic provisions of the Constitution will also boost the economy.
“The biggest source of rigidity remains constitutional restrictions, which compel many businesses desiring to do business in the Philippines to go through complex structurings to gain access to a fast-growing and robust domestic market with one of most demographically dynamic population base,” he said.
Three measures seeking to amend certain provisions of the 1987 Constitution are pending.
These seek to amendment Articles VI (Legislative Department), X (Local Government), XII (National Patrimony), XIV (Education, Science and Technology, Arts, Culture and Sports) and XVI (General Provisions) of the 1987 Constitution of the Republic of the Philippines.
One resolution seeks to amend the provisions of the Constitution, particularly Section 2, Section 3, Section 4, Section 7, Section 10, Section 11, of Article XII, or the National Patrimony and Economy, by inserting the words, “unless otherwise provided by law.” This, in a bid to relax the restrictive foreign ownership to attract more foreign direct investment.
However, Speaker Alan Peter Cayetano said Cha-cha is not yet part of the chamber’s priority.
Oversight functions
To make the economy more competitive with the enactment of the ease of doing business law and the Anti-Red Tape Act, Majority Leader Martin Romualdez said the House will exercise its oversight function to ensure these reforms laws are implemented faithfully.
For her part, Deputy Minority Leader Stella Quimbo commended the administration for making this a priority concern, and Congress for passing Republic Act 11032, or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018.
“Both of these initiatives have already resulted in a considerable improvement in our global rankings,” she said.
However, Quimbo said one area of improvement to work on is the transparency and expediency of the judicial system, where the country’s performance has not improved (ranked 152).
With the appointment of Chief Justice Diosdado Peralta, Quimbo expressed confidence that the country will continue to see improvements.