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‘Govt must take advantage of US-China trade war’

May 21, 2019

A public-advocacy group on Monday urged the government to seize the opportunities offered by the escalating trade war between Washington and Beijing to lure factories in China to the Philippines.

In a statement, the Foundation for Economic Freedom (FEF) said luring these factories would “greatly boost manufacturing, result in much-needed technology transfer, and increase and diversify our exports.”

“The Philippines could become an alternative destination for thousands of these factories seeking to avoid the US-China trade war,” it added, noting that the country “has a highly skilled and English-speaking workforce.”

According to the organization, many China-based factories are now seeking to relocate to other countries to avoid being slapped by punitive tariffs on its exports to the United States.

It noted, however, that the Philippines would have much to do to lure them here.

The government, FEF said, must pass the Tax Reform for Attracting Better and Higher-quality Opportunities (Trabaho) bill to remove the uncertainty about the tax regime on fiscal incentives and corporate income taxes.

“We support the rationalization of fiscal incentives and the lowering of corporate income taxes under Trabaho, but we also support the retention of incentives for footloose and labor-intensive industries,” it added.

The amendment to the Public Service Act must also be passed soon to liberalize foreign investment in transportation and telecommunications, according to the group.

“The quality, cost and efficiency of transportation and telecommunications are inputs to the decision of companies whether to relocate here. Therefore, we need more foreign investment in…transportation and telecommunications to bring more competition, improve services and lower prices,” it said.

FEF also urged the government to implement the Ease of Doing Business Act, noting that it had yet to issue the implementing rules and regulations for it a year after its passage.

This law “will simplify procedures and establish timelines in securing permits and other transactions with government,” the group said.

The organization also warned that passing the Security of Tenure bill, also known as the Ending Endo (End of Contract) Act, “will hamper the flexibility of firms, especially in dealing with disruptive changes to businesses caused by technology.”

Passing this measure “will not only deter China-based factories from relocating here, [but also] scare existing investors who will flee to other countries, such as Vietnam and Indonesia,” FEF said.

The group also cited the need to implement the government’s massive infrastructure program, noting that “our creaky infrastructure, from ports to roads, make doing business in the Philippines costly and inefficient.”

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