THE Mactan Export Processing Zone Chamber of Exporters and Manufacturers (Mepzcem) has urged the Senate to retain the Philippine Economic Zone Authority’s (Peza) powers to grant incentives to its registered export-oriented enterprises or else they will pull out of the country.
In a position paper sent to senators, Mepzcem, an organization with 157 company members located across various economic zones in the island of Cebu such as the Mactan Economic Zone 1 and 2, the Cebu Light Industrial Park, the West Cebu Industrial Park-Special Economic Zone and the MRI economic zone ,among others, said they continue to operate during the quarantine period despite incurring huge losses and logistics difficulty.
“We could say that we are a major factor in keeping the country’s economy alive. We have sustained the most basic needs of workers preventing social unrest. This will adversely affect the livelihood of 214,745 direct workers and 1,073,724 workers in the support chain from 394 companies in the economic zones in the Visayas and Mindanao,” it said.
Mepzcem said the Corporate Recovery and Tax Incentives for Enterprises (Create) Act would clip the powers of Peza, which has administered the economic zones so well over the years.
“This would break the trust and confidence of our investors and could trigger an exodus of companies to other countries that are currently offering much better and consistent long-term incentives. To quote the executive of one of the major manufacturing firms in Mepz, ‘We are waiting to hear the outcome of Create bill in the Senate. If it is passed, we will plan our exit to another country’,” the position paper stated.
Under the Create bill, Peza incentives, which include income tax holiday, duty-free importation of raw materials and capital equipment, domestic sales allowance, and exemption from payment of local government taxes and fees, will be “modernized” to include tax breaks of select investors.
Final push, betrayal
Mepzcem explained that many companies are now downsizing to stay competitive in this shrinking global market grossly affected by the pandemic but Peza incentives have offset the disadvantages.
Status quo of tax incentives is said to preserve the jobs of over 6.5 million employed directly and indirectly by Peza. Peza has 4,542 export companies in its 408 economic zones. It said its current incentives are already tried and tested to be globally competitive.
“Many companies are already saddled with the increasing costs in the Philippines and the disruptions to operations due to various government projects and Create would just act as that final push which will tilt the needle in favor of moving out beguiled into the welcoming arms of the neighboring Association of Southeast Asian Nations countries offering more benefits,” it said.
Mepzcem also expressed that the general perception of the locator companies is “betrayal and ingratitude by the Philippine government.”
“After being offered benefits and incentives which were the driving force to come and invest in the Philippines and ably administered by Peza, they provided employment and improvement in the surrounding communities, and Create is taking it away. Many companies might file breach of contract both in the Philippine and international courts,” it warned.
Mepzcem said affected companies have or are in the process of alerting their parent companies and networks worldwide over the unfavorable business situation in the Philippines with many of them putting their investment and expansion plans on hold. (JOB)