Press Releases

Salceda says FIRB big ticket approvals are “in sectors crucial for development;” House tax chair asks body to study non-fiscal incentives package for defense, renewables

September 26th, 2022

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) praised the Fiscal Incentives Review Board for approving close to P405 billion in big ticket investments since it became the principal committee for approval of large investor applications for tax perks following the enactment of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law.

“It’s excellent news, especially since the sectoral breakdown is very good. You have investments in cement manufacturing, mass housing, shipbuilding, rail, and communications infra – all crucial for rapid and industrial development,” Salceda said.

“I expect even more applications for big ticket projects as we have already liberalized key sectors through the amendments to the Public Service Act, the Foreign Investments Act, and the Retail Trade Liberalization Act.”

Salceda adds, however, that the FIRB can do more to attract foreign investors in crucial areas by invoking Section 297 (M) and Section 300 of the Tax Code, as amended by CREATE, which give the FIRB the power to recommend “types of non-fiscal support to create high-skilled jobs to grow a local pool of enterprises (MSMEs), that can supply to domestic and global value chains, to increase the sophistication of products and services that are produced and/or sourced domestically, to expand domestic supply and reduce dependence on imports, and to attract significant foreign capital or investment.”

“Sometimes, the fiscal support might not be enough, especially if you’re talking about very big whales that are crucial for our industrial development.”

“The underused provision of CREATE is really the power to craft non-tax incentives.”

“For example, Texas Instruments imports around USD 3 billion every year. That’s just one company, accounting for 4% of our total exports. We attracted more investments from TI through Executive Order No. 666, issued by President Arroyo, which granted them access to the Industrial Competitiveness Fund, a program where government subsidized power costs in return for more investments.”

“We already have an additional power cost deduction (50%) under the CREATE law. So, power might not be the best non-fiscal incentive. But infrastructure is certainly a driver of investment. I think the FIRB can recommend an executive order that directs government agencies to converge programs on infrastructure and ease of doing business around areas where whales are set to invest.”

By ‘whales,’ Salceda is referring to USD 1 billion or more in investment capital which may be given special incentives by the President under Section 301 of the Tax Code.

“That provision basically allows the creation of non-tax incentive packages. I think PBBM, with his historic mandate, can and should fish for big whales such as big battery manufacturing for renewable energy, that would allow solar and wind to be baseload power, or a big defense manufacturing company to locate here.”

“I certainly think that renewable energy and defense are key sectors that we need to take the extra mile in. It’s the FIRB that can get them in here, through CREATE.”

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