SEIPI’s plea: Review incentives rationalization

A semiconductor worker assembles electronic chips at the Laguna Technopark in this 2018 file photo.

THE Semiconductor and Electronics Industries in the Philippines Foundation Inc. (SEIPI) is urging the government to review the incentives rationalization, which it said is putting the industry at a disadvantage.

At a webinar on Wednesday, Seipi President Danilo Lachica pointed out that he earlier proposed to former Finance Secretary Carlos G. Dominguez to level the playing field in operating cost first before doing so with incentives, noting that multinational investors pursue the country with the most competitive operating cost.

Lachica underscored that there are about $3.2 billion of investments that could have gone to the Philippines but have instead been moved by multinational firms to other countries including Vietnam, Thailand, Malaysia, and China due to issues on the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law, particularly the rationalization of incentives.

The Seipi chief didn’t name the publicly listed companies but stressed that, “I think one of the biggest concerns in addition to the high operating cost would be the incentives.”

“In fact with former Secretary Dominguez when I first met with them, we said that ‘hey you know it’s way to level the playing field for incentives’ but we were proposing that let’s level the playing field first in operating cost because the reality is from the multinational’s perspective, incentives or not, they’re gonna go to the country which gives the most competitive operating cost in terms of cost per unit,” said the Seipi chief.

In addition, Lachica emphasized that “while Sec. Dominguez says we increased incentives investments in the Philippines by 50 percent…of 2020, the reality is we’re sadly lagging behind Vietnam and other Asean countries.”

With this, the Seipi chief stressed, “we are hoping that the new administration would review the incentives rationalization part because it’s really putting us at a disadvantage.”

Lachica noted that while the industry enjoys the 10-year transition period under the CREATE law, the investments for new products and new technologies “are not being located in the Philippines.”

Further, the Seipi chief noted, “So what’s happening especially for our industries that depend on new products and new technologies, is they’re just gonna run these legacy products and then when they become obsolete, guess what? There’s not much need for the Philippine side, so that’s the scary part.”

Last month, in a televised interview, the Seipi chief underscored that although the demand has always been there for the electronic exports, the semiconductor industry is not spared from challenges that it has to face.

Particularly, Lachica said, the industry is also suffering from higher costs of logistics, power, operating, and utilities.

With this, Lachica stressed that the government should review the incentives rationalization and promote the ease of doing business as well as reconcile policies that have to a certain extent really proved helpful to the industry.

The Seipi chief said last month they have already tried to line up meetings with the new government, including with the President and Cabinet members to explain the industry’s situation and the real threats they are facing especially amid the challenging environment that we face today.

However, Lachica said on Wednesday that while he already informed former Finance Secretary Carlos Dominguez, former National Economic and Development Authority (Neda) Secretary Karl Chua, and both chambers of the Congress about their concerns, “it fell on deaf ears.” Still, the Seipi chief hopes that the new administration will listen to their plea.

Image credits: Nonie Reyes


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