MANILA should keep Washington’s midrange missile system left behind in April to keep Beijing at bay amid its aggressive actions in the South China Sea, a Philippine senator said on Thursday.

“I am in favor of retaining defensive missile systems in the Philippines as a deterrent for any future provocative actions,” Senator Juan Miguel F. Zubiri told a forum at the Senate.

“Remember, it’s a defensive weapon system, not an offensive system.”

He noted that investing in defensive and protective weapons systems aboveboard since the Constitution only bars procuring nuclear weapons for national defense.

Washington has no plans to withdraw its Typhon missile system from the Philippines and is studying its use in a regional conflict, Reuters earlier reported.

China and Russia have criticized the move, saying it could fuel an arms race in the region.

Manila is considering all security options that would deter Chinese aggression in the waterway amid the US keeping the missile system in the country, Defense Secretary Gilberto Eduardo Gerardo C. Teodoro, Jr. told reporters on Tuesday. 

The US Army flew the Typhon, which can launch missiles including SM-6 missiles and Tomahawks with a range exceeding 1,600 kilometers (994 miles), to the Philippines in April in what it called a “historic first” and a “significant step in our partnership with the Philippines.”

The Philippines is open to acquiring the Typhon midrange missile system, Agusan del Norte Rep. Jose “Joboy” S. Aquino II said last week, as he sponsored the 2025 budget of the Defense department.

Mr. Zubiri said missile systems would complement the radar systems given by Japan that would be detect attacks in the South China Sea.

“These radar systems are not enough since even if these allow you to see these attacks, we still need to defend ourselves,” he said in Filipino.

Senate President Francis “Chiz” G. Escudero earlier told foreign journalists that the chamber is planning to ratify Manila’s reciprocal access agreement with Tokyo before the year ends.

The military pact, which was signed in July, eases the entry of equipment and troops for combat training from Japan and to ensure stability in the region amid growing tensions with China.

The Philippines has a visiting forces agreement with the United States and Australia. Tokyo, which hosts the biggest concentration of US forces abroad, has a similar deal with Australia and Britain, and is negotiating another with France.

A United Nations-backed tribunal based in the Hague in 2016 voided China’s expansive claims in the South China Sea for being illegal, which Beijing has rejected.

“As long China is this provocative, then we welcome all the support because we cannot do this alone,” the ex-Senate president said. — John Victor D. Ordoñez

THE PHILIPPINES is expected to see an uptick in investors from South Korea and Japan following the Senate’s concurrence in a free trade agreement (FTA) encouraging more of Seoul’s automakers to set up shop in the country, and the approval of a bill lowering taxes on foreign companies to 20% from 25%, according to a senator.

“This will pave the way for Korean companies to come into the Philippines to set up shop and would make it easier for Korean businessmen to get business visas under this agreement, meaning more jobs,” Senator Juan Miguel F. Zubiri, who heads the committee on economic affairs, told a forum at the Senate on Thursday.

The Senate on Monday concurred with the free trade agreement between the Philippines and South Korea, which will pave the way for increased exports of Philippine bananas and processed pineapples to Seoul.

Under the deal, the Philippines secured the elimination of 1,531 tariff lines on agricultural goods, of which 1,417 would be removed after the FTA enters into force.

It will also remove 9,909 tariff lines of industrial goods, 9,747 of which will be removed once the deal takes effect.

South Korean automakers are expected to benefit from the deal with the removal of the 5% import duties imposed on Korean-made automobiles. Tariffs on Korean electric and hybrid vehicles would also be eliminated within five years.

“Korean goods will be cheaper, but at the same time, our agricultural products will be more accessible in Korea… with less tariffs and less protectionist measures of the Korean government,” Mr. Zubiri.

Meanwhile, the senator said Japanese companies have shown interest in expanding their businesses in the Philippines due to streamlined tax incentives for export-oriented businesses proposed under the recently passed bill that provides export-oriented registered business enterprises (RBEs) with value-added tax zero-rating on essential services.

“Japanese companies that wanted to relocate, have said they wanted to expand here since the Bureau of Internal Revenue won’t have to charge them for local packaging,” said Mr. Zubiri, among the authors of the measure.

He earlier said Japanese companies threatened to leave the country after stalled Value-added tax (VAT) refund requests.

Congress earlier this month passed the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill, which would set a local tax of 2% for RBEs based on gross income.

RBEs are provided with a 100% deduction on power expenses incurred in a taxable year, from 50% previously.

CREATE MORE will also grant RBEs with a capital stock of over P15 billion will be granted VAT zero-rating on local purchases, VAT exemption on imports, and duty exemptions on imports of capital equipment, raw materials, spare parts and accessories. — John Victor D. Ordoñez

By John Victor D. Ordoñez, Reporter

THE American Chamber of Commerce of the Philippines (AmCham) said the Philippines should pursue reforms and improvements to the country’s airports to boost tourism after the Senate approve a bill seeking a value-added tax (VAT) refund mechanism for nonresident tourists.

“A VAT refund (mechanism) for tourists has been successfully implemented in several countries so there is no reason it shouldn’t be successful in the Philippines if properly implemented,” Ebb Hinchliffe, AmCham’s executive director, said in a Viber message.

“However, AmCham has long pushed for airport reform which would have a much better impact on tourism.”

San Miguel Corp. took over operations of the Ninoy Aquino International Airport on Sept. 14 to work on improving the airport’s roads, terminal capacity and to upgrade the passenger experience.

“I think that (VAT refund mechanism) will boost tourism, but if corruption would happen it would be at the airport,” Senator Juan Miguel F. Zubiri said in mixed English and Filipino at a forum on Thursday.

The Senate on Monday approved on final reading a bill that seeks to establish a refund system for goods worth at least P3,000, which aims to boost visitor spending.

Senate Minority Leader Aquilino Martin D. Pimentel III had opposed the bill saying the country should focus on improving the tourist experience and infrastructure, adding that the system could lead to revenue leakages.

Citing a 2018 World Bank study, he said the Philippines has lost about P539 billion in potential revenue due to VAT leakages and exemptions.

Meanwhile, Mr. Zubiri said the government should ensure this refund mechanism won’t be abused since the measure could be prone to corruption.

“I was assured by Senator Sherwin T. Gatchalian, who is our ways and means chairman, that they put enough safeguards because unlike Japan, tourists won’t be able to buy from the point of origin (to avail of the refund) but only in the airport,” he said.

Nonresident tourists will only be entitled to the VAT refund if they buy the products from government-accredited stores within 60 days of their request.