Given the challenges brought about by the Covid-19 pandemic, House Ways and Means Committee chair, Albay Rep. Joey Sarte Salceda has urged the government to lay down in clear terms the groundworks before yearend for what he dubs as the Philippines’ “20-20-20 do-or-die” economic goals to ensure the country’s global competitiveness in the decade ahead.
Summarized simply, the targets are as follows: 20 percent corporate income tax rate by 2027; 20 million new and/or upgraded high-skill jobs over the next ten years; and US$20 billion in annual foreign direct investments (FDI) inflows. He said the measures for these targets, considered as the barest requirements, are critical in ensuring the country’s competitiveness in a more globalized economy.
Salceda said these are “do-or-die goals, the minimum for national economic development in a globalized, information-based world order, and if we don’t make them happen, we can forego whatever national ambitions we have of becoming a high-income economy.”
The lawmaker said the enactment into law of the long delayed Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act is the “lowest hanging fruit” that will help the country generate $20 billion in annual FDIs.
“CREATE, at the very least, will help us get to 20% CIT (corporate income tax) rate by 2027. That is critical. I will not accept a decoupling of the CIT and the fiscal incentives regime. The latter has been delayed for far too long to the detriment of the increased FDI inflows,” he said.
“You leave the question hanging, and we will continue to see the uncertainty that every respectable economist says was caused by policy indecision. We need it now. “We need CREATE’s flexible non-fiscal incentives, if we want to attract the kind of whale-sized or elephant-sized investments we need to develop a thriving higher-order value chain,” Salceda explained.
He said that if CREATE is enacted into law, the Philippines could get as much as $20 billion FDIs amidst the escalating US-China trade tensions that push global manufacturing investors to diversify their value chains.
Salceda reiterated his goal of increasing the country’s annual FDI inflow to USD 20 billion, or around double the current levels. “We remain the most restrictive country to FDIs. Let’s get the Public Service Act, Foreign Investments Act, and Retail Trade Liberalization Act amendments done. They await Senate passage, just like CREATE,” he pointed out.
The noted economist lawmaker also emphasized the need for a well-trained, ‘digital-ready’ workforce. “We typically do not look at labor and training proposals as economic policy. That narrow-mindedness will not get us anywhere in the digital age,” he added.
“Our labor force is service-sector based, but the services we offer are still at the lower-order in sophistication and economic value. By 2030, if we cannot create 20 million high-skilled jobs, the game is up, as far as achieving high income status by 2040 is concerned,” he explained.
Salceda said he will seek the leadership’s commitment to prioritize the passage of his proposed “21st Century Skills Act,” “Financial Technology Industry Development Act,” “Digital Economy Taxation Act,” “Satellite Liberalization Act,” “Faster Internet Act,” and the Comprehensive Education Reform Agenda.
“The crisis has emphasized the urgency of national evolution. We have to be prepared for a future where low-skill, lower-value services are no longer necessary, and where retail and other sectors that employ most of our people will no longer be the same industries they look like now.
“In many ways, they are already rapidly changing. Of course, it’s a simplification to say it’s all we need. But these 20-20-20 are minimum conditions. If we can get them done, we can be a global power,” Salceda said.