The passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill will boost business activities in the proposed Leyte Ecological Industrial Zone (LEIZ), a Department of Trade and Industry (DTI) official said.
At a news event on Monday, Trade Undersecretary and Board of Investment (BOI) Managing Head Ceferino S. Rodolfo said that the LEIZ master plan project “hinges on several reforms that the national government has been undertaking,” pointing to the said bill, which was previously named as Corporate Income Tax and Incentive Rationalization Act (Citira).
“This is very important that Citira bill provided a robust framework to implement a time-bound, performance-based, focused and transparent regime, while the CREATE bill built on the framework that was forwarded already by the Citira bill,” he explained.
The measure is proposing to cut the corporate income tax (CIT) immediately to 25 percent from 30 percent upon effectivity. The CIT will then be reduced further by 1 percentage point every year from 2023 to 2027 until it reaches 20 percent.
“We hope that they [government] can really speed up…. Hopefully we could already pass a rationalized incentive reform bill,” he said.
Another key CREATE bill provision that Rodolfo highlighted was the removal of nationality and export bias when it comes to providing tax perks to investors.
He said that this can help in developing the local manufacturing chain for the copper industry in Leyte as foreign companies will be encouraged to set up their own wire rod facility in the Philippines.
Rodolfo explained that local copper facilities usually export cathode—a basic product in copper production—to factories in other countries like Japan to be processed into wire rods.
The local wiring harness facilities will then import the finished wire rods for further manufacturing. The wiring harness is a product being exported for the use of electric vehicles and appliances, among others, he added.
In short, having a wire rod facility in the economic zone will eliminate the need to import wire rods when producing wiring harnesses.
On November 26, 2020, the Senate passed on third and final reading the CREATE bill, voting 20-1. The House Committee on Ways and Means adopted the Senate version of the bill on the same day, but reversed its decision a few weeks later as some of its members raised concerns. Its chairman, Joey Sarte Salceda, said that the bicameral conference committee is eyeing to finish reconciling all the conflicting provisions by January next year.
Supporting copper industry
The LEIZ master development plan was launched on Monday, a year after the initial integrative analysis on the conceptual master plan. In the first half, an environment impact assessment was conducted in relation to the project.
The master plan, which is included in the Copper Industry Roadmap crafted back in 2012, is aimed at promoting copper wire road and enameled wire manufacturing facilities. It is also set to identify downstream copper products that may be locally produced.
“Given our country’s vast copper deposits amounting to an estimated 1.14 billion metric tons, we envision a fully integrated Philippine copper industry by the year 2030 through the development of a wire rod casting facility and higher value copper products,” Trade Secretary Ramon M. Lopez said.
According to LEIZ Core Master Plan, the industrial zone is proposed to cater to iron and steel-making plants and downstream iron and steel industries (328 hectares); copper wire-rod casting and copper enamel wire casting (363 ha); and downstream copper industries (363 ha).
With a design population of around 500,000, some 60,000 industrial jobs are expected to be generated.
Palafox Associates, headed by architect Felino A. Palafox Jr., was chosen by the Board of Investments to develop the master plan during a public bidding.
In designing the project, Palafox said that the firm considered the impact of the coronavirus pandemic so it can adapt to the so-called new normal.
“This pandemic really changed our way of planning cities, designing buildings,” he said, noting that some revisions were made for the plan.
The Philippines’s only copper smelter and refinery is in Isabel, Leyte. The local industry exports approximately $2 billion worth of copper annually.