‘No confidence’ DTI will protect investor interests, Japan chamber says

THE Japanese Chamber of Commerce and Industry (JCCI) of the Philippines said the Department of Trade and Industry (DTI) has demonstrated insufficient for its support for foreign investors.
“DTI does not support us anymore. No statement supporting investors,” JCCI Vice-President and Executive Director Nobuo Fujii said in an interview in Makati City.
He said the sense of distrust began in January during a meeting between government agencies and joint foreign chambers, when the DTI expressed support for the Finance department’s tax reform package. Mr. Fujii has said that the tax reforms currently being pushed through the legislature, which seek to rationalize incentives offered to foreign investors, is viewed as the “biggest problem” by Japanese investors.
“We lost confidence in the DTI starting January,” he added.
The proposals considered most problematic by Japanese investors include the replacement of the 5% gross income earned (GIE) tax after five years with a preferential corporate tax rate of 15% based on net profit.
Japanese investors, Mr. Fujii said, consider the sunset period to be too brief, and want a period of 10 years to continue enjoying the 5% GIE rate.
For new investors, the JCCI proposes that time-bound incentives be in force for a minimum of 15 years, including several years of income tax holidays.
Sought for comment, Trade Ramon M. Lopez said in a mobile message: “Of course we continue to support the exporters and investors.”
“But we have a reform to do to make the incentives more relevant, performance based and time-bound,” he said, adding that the department continues to consult stakeholders to arrive at a “more acceptable and balanced transition period.”
Mr. Lopez, however, has expressed his backing for extending the five-year transition period to 15 years.
The DTI last month released a statement saying that Mr. Lopez, during a recent meeting, briefed Japanese investors on the second package of tax reform, which he said: “provides us with the mechanisms both to encourage existing investors to further expand their business, and to attract new investors into the country.”
Mr. Fujii said the JCII is pinning its hopes on the Philippine Economic Zone Authority to intervene to reach an acceptable compromise. — Janina C. Lim