Japan Cites Hindrances To Investments

MANILA, Philippines --- Tax, logistics and electricity.

These are just some of the problems that foreign investors, particularly those coming from Japan, face when transacting business in the Philippines, according to the Minister for Economic Affairs of the Embassy of Japan.

In a recent interview with reporters at the sidelines of the inspection of Japan's official development assistance (ODA) and Japan-Bangsamoro Initiatives for Reconstruction and Development (J-BIRD) projects in Mindanano, Minister Akio Isomata bewailed the tax-related issues encountered by Japanese locators operating in economic zones particularly on value-added tax (VAT) refunds.

Isomata pointed out that they are not actually ''VAtable'' but during transactions within the Philippines these Japanese locators have to pay VAT.

However, at the end of the process, Isomata explained, they have to be refunded for what they paid for the domestic transaction in the Philippines.

''But it takes so much time for those tax credit certificates, it's not easy to be encashed,'' he said.

Although ''we are now seeing progress'' because the Philippine government has already allocated funds for VAT refund, Isomata said what they would like to see is ''real refund that relates to speedy implementation.''

''We'd like to see the implementation as soon as possible,'' the Japanese embassy's Minister for Economic Affairs said.


On the issue of logistics, Isomata noted that there is too much congestion in Manila.''It's an economic loss,'' he said. ''The solution is in the hands of the Philippine government.''

Isomata said Japan has provided assistance to decongest Manila port by promoting the use of the Batangas port together with Japanese companies, and the Japanese Chamber of Commerce.

''We are really mobilizing Japanese locators situated in the southern part of Luzon to use Batangas port,'' he said. ''We are also asking the Philippine government to lower port charges to give some incentives.''

This actually is already being done, he said since ''the Batangas port charge is lower already, now less expensive than Manila.''

''There are some companies interested like the company of Maersk,'' Isomata pointed out. ''They are now trying to service Batangas-Singapore-Kaoshiung on a trial basis so we would like to use this opportunity to change the flow of cargo, to divert some of the cargo going to Manila to Batangas port.''

The problem now, he said, is the Philippines is not using those ports.


Another very serious concern for Japanese investors here in the Philippines is electricity, he said.

''We'd like to see a stable supply of electricity at a reasonable price for inviting more investment from Japan,'' he said.

Isomata noted that the energy price in the Philippines is extremely ''exorbitant right now.''

''I think the highest and most expensive among the ASEAN (Association of Southeast Asian Nations) countries, even more expensive than Singapore or Japan,'' he said, noting that the problem can be traced to structural problems.

Isomata said in order for the Philippines to invite more investments in the electricity sector, it must do something about the Electric Power Industry Reform Act (EPIRA), a law meant to reduce National Power Corp.'s debt.

''Otherwise it may be difficult for investors to come in,'' he said. ''Because what they would like to see are real results because there are regulations, joint circulars, procedures that were set up already.''

But Isomata has positive things to say about the investment climate in the Philippines.

''The central reason why some businessmen would change their outlook on the Philippines is its young and skilled labor force,'' he said. ''They're very good, hardworking, and they speak fluent English.''

Isomata said this is totally different from the situation in Vietnam, Indonesia, and even China where only a handful of people there know how to speak English.

He said Japanese technical staff and managers have to use translators to talk to the people on the production line.

Davao del Sur Gov. Douglas Cagas said the President should ''properly enforce the laws without exception'' to solve the problems highlighted by Isomata.

''Whether we belong to the same party or to the past administration, the laws must be imposed,'' Cagas told reporters in a separate media briefing. ''It is only in the consistency in the enforcement of the law that criminals or even the corrupt in government will give their due respect.''

Cagas said the energy problem in Mindanao has been foreseen 10 years ago
However, he said ''there's a big hope.''

''We are suggesting that the Japanese engage in energy and power investments, especially in wind and solar energy,'' said Cagas.

He said there was a suggestion that windmills be put up near Mt. Apo that are ''bigger and safer than the windmills of Ilocos Norte.''

Cagas said there are also plans to put up coal fired power plants just like in Davao City.

He said he recently discussed the energy problem with Energy Secretary Jericho Petilla.
''He said he is not yet sure on what to do with the energy problem here in Mindanao,'' Cagas said. ''So I guess we just have to bear it, specially during dry season when power here is largely dependent on Maria Cristina Falls.''

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