Businesses to thrive with TRAIN 2 – NEDA

MANILA, Philippines — Businesses are still expected to thrive even when the second package of the Tax Reform for Acceleration and Inclusion (TRAIN 2) has been set in motion, the National Economic and Development Authority (NEDA) said.

NEDA Undersecretary Rosemarie Edillon said while businesses have expressed apprehension over the second package of the tax reform agenda that lowers corporate income tax but rationalizes the provision of incentives, most of the concerns stem from the still indeterminate extent of the effects of TRAIN 2.

Firms, at this point, are still on a wait-and-see attitude but are expected to roll with the punches once the new regulation is firmly in place, she said. This apprehension has already been reflected in the 83 percent drop in foreign investments pledged as of the fourth quarter of 2017.

“Investors still need to see how it will pan out. But actually we have done the math already and there will still be gains. So even if you reduce the incentives, those that will be removed are the redundant ones and the corporate income tax will be lowered,” she said.

The proposed second package has yet to be deliberated on in Congress.

Edillon said, however, that investors remain upbeat about prospects in the Philippines especially on the administration’s massive infrastructure development agenda.

“They (investors) just want to be aware of the policy, what the policy regime will be. Once that has been put in place, they can make their decisions correspondingly,” she said.

Most of the investors waiting on the sidelines are in the manufacturing industry which is labor and input intensive. By country of origin, Edillon said these firms are from the Netherlands, United Kingdom, European Union, US, Japan and Korea.

Other investors are also keen on participating in the Build Build Build program because of the so-called first mover advantage.

“I think they are really interested in Build Build Build infrastructure. There is a first mover advantage, so if you know that this country is gonna take off in a big, big way after say four or five years, you would want to start now,” she said.