Despite impressive statistics, the current trade and investment relations between the Philippines and the European Union remain somewhat below their real potential. Significant policy and regulatory improvements have been made in many areas and the Philippines has managed in recent years to achieve strong economic performance.
However, important concerns remain.
The European Chamber of Commerce of the Philippines recommends improvements in key areas that would make significant and meaningful contribution toward strengthening the Philippines’s competitiveness and attractiveness as a global investment destination to the benefit of both the Philippines and its trading partners.
Transparency and predictability in policy making and the application of rules and regulations is regarded as essential for a stable business environment in a modern economy. As mentioned in earlier statements, there are at least five areas where rules are threatened to be changed midstream: 1) 60:40 interpretation; 2) review of the mining law; 3) the water concessions of Manila Water and Maynilad; 4) legal and local government unit/non-governmental organization interference in the building of much-needed infrastructure; and 5) the value-added tax (VAT) refunds, being extremely delayed and ending up in the Supreme Court (SC)—the case of San Roque Power Corp. is a problematic example as the SC ruled “retroactively” rather than “prospectively,” shortchanging many local and foreign investors.
Lack of clarity and transparency in policy making and in the application and interpretation of rules and regulations has been identified as a key concern in the Philippines.
Positive is that the Philippine customs regime is being addressed and we wish the customs commissioner and his colleagues success in their difficult job.
A competitive tax and investment promotion regime is essential. The impact that tax systems have on companies is important; therefore, governments should develop tax systems which foster business investment and economic growth. Efficient tax administration can encourage the development of the private sector and the formalization of business. Both business and the government can benefit from tax systems which are simple to administer and have reasonable compliance costs. The Department of Finance and the Bureau of Internal Revenue should study bringing down the income tax level (32 percent is high in comparison to competing countries) and increase consumption taxes VAT.
With the creation of the Asean Economic Community (AEC) starting 2016—and the free movement of goods, services, investment, capital and skilled workers that it will bring—the Philippine government should push for such changes now and not wait for potentially disruptive changes to emerge when the AEC springs to life.
Several bodies are responsible for different aspects of technical regulations and standards in the Philippines; conflicting and competing standards pose concerns to business operators. Certification procedures for some industrial products are lengthy or even redundant. There are similar concerns relating to food and drug products, particularly with regard to sanitary and phytosanitary measures and import procedures. In light of the approaching AEC, standards and technical regulations have to be harmonized. Improvements in this respect would strengthen efficiency and reduce unnecessary costs and hindrances to business.
Source: Business Mirror, 11 September 2014
In close partnership with government, businesses, civil society, and academia, ECCP passionately works to enhance the business environment for both European and Filipino companies.