Finance chief tells local firms: Spend more for digitalization
PRIVATE firms in the country should invest more in digitalization and innovation to remain competitive as technological advancements accelerates because of the coronavirus pandemic, Finance Secretary Carlos G. Dominguez III said.
“As our country recovers from the pandemic and industries get back on their feet, businesses will require heftier investments in innovation and technology in order to stay competitive,” Mr. Dominguez told participants in an event hosted by the Department of Science and Technology (DOST) on Monday.
“Technological innovations will build new industries and create many employment and investment opportunities. These will allow us to bounce back stronger from the pandemic and help ensure the long-term recovery of our economy,” he added.
The DoST launched its Advanced Manufacturing Center (AMCen) in Taguig City on Monday. AMCen is a technological hub and research center for additive manufacturing, which also houses the country’s first 3D printing research and development (R&D).
Mr. Dominguez said he expects the center to play a major role in the country’s shift to technology and serve as a starting point to upskill workers on advanced manufacturing activities.
Lockdowns and the continued spread of the coronavirus disease 2019 (COVID-19) forced businesses around the world to accelerate their digitalization plans to cope with the new normal.
Aside from actual infrastructure, current tax policies will further support R&D since the newly enacted Corporate Recovery and Tax Incentives for Enterprises (CREATE) law reduced the corporate income tax rate and offered special tax perks to the sector.
Republic Act 11534 or CREATE act will gradually cut the corporate income tax to 20% from 30%, and reform the country’s fiscal incentive scheme.
It also grants 100% additional deduction from taxable income on R&D expenses for eligible companies to encourage them to innovate and adopt new business models.
“The Department of Finance uses this fiscal policy as a tool to promote a regime that rewards innovation and the creation of new knowledge,” Mr. Dominguez said.
“The law provides significant reductions in corporate income tax rates for all enterprises in the country. These tax savings could very well be used by businesses to modernize their systems and processes,” he added.
Based on the latest Tholons Global Innovation Index released in March, the Philippines dropped out of the top 10 list of countries deemed as attractive destinations for technology, digital and innovation in 2020. The country is now at 18th in the Top 50 Digital Nations.
Meanwhile, the country reached its highest rank so far in the Global Innovation Index 2020 after ranking 50th out of 131 economies studied. — Beatrice M. Laforga