Special points of inter-

ests:

Local News

Business group seeks

lifting of foreign

ownership limits–

page 1

10 to 15 MNC head-

quarters pull out of PH

on tax issues —page 2

JFC Urges gov’t to

entice new power

investments –page 2-3

KCCP Report

Arangkada Philippines

Forum 2019 | 3-4

November 2019 Issue | Vol. 20

필리핀한인상공회의소뉴스 KOREAN CHAMBER OF COMMERCE PHILIPPINES NEWSLETTER

Business group seeks lifting of foreign ownership limits November 22, 2019 | Malaya Business Insight

More reforms needed. MAP says trade costs could be greatly minimized by improving the country’s port and logistics infrastructure. (Source: Manila Business Insight)

The head of the Management Association of the Philippines (MAP) called on the need to lift own-ership restrictions in certain sectors to encourage the entry of capital. Speaking at the Arangkada Forum in Pasay City yesterday, MAP president Riza Mantaring said the Philippines can start by simply reducing the number of sectors in the negative list, the roster of industries where majority foreign equity is barred. “In the over three decades since (the Constitution) was ratified, the world has moved on and globalization has changed the environment dramatically,” Mantaring said.

According to Mantaring, limited competition in key sectors has significant consequences for the economy has led to “poor transport on logistics, and on every industry which relies on the movement of goods.” She said trade costs could be greatly minimized by improving the country’s port and logistics infrastructure. Lifting the restrictions, she said, will enable the Philippines catch up with its Asean neighbors when it comes to foreign investments. Aside from foreign ownership restrictions, Mantaring cited burdensome administrative processes and labor market rigidities as affecting investment sentiment in the country. Although the Ease of Doing Business Act is now being implemented, Mantaring cited the need to make it easier to start new businesses, get approvals and pay taxes. “Burdensome administrative procedures not only deter new businesses from starting up and existing ones from expanding, they also encourage corruption, as do complicated tax rules and processes. They also hold back badly needed infrastructure such as new power plants, many of which are mired in the approval process despite the looming power shortage,” she said. In explaining how labor market rigidities have made it difficult to do business in the Philippines, Mantaring related her own experience as a former private sector executive. “I remember numerous instances when I had to explain to our corporate and regional offices overseas why we couldn’t fire an obviously incompetent employee. And worse, why we had to give him a separation package after months, or even years, of non-performance! While we need to ensure that employees are protected from abusive employers, we also need to ensure that our laws adapt to the times. For example, rather than security of tenure, why not portability of benefits?,” Mantaring said. To end her remarks, Mantaring stressed that one of the biggest factors which makes investing attractive in any country is predictability. “When you are investing billions, even hundreds of millions, you need to know that the conditions under which you invested would not suddenly change,” Mantaring said. Source: https://malaya.com.ph/index/index.php/news_business/business-group-seeks-lifting-of-foreign-ownership-limits/

She said restricted competition protects unproductive or poorly-performing firms at the expense of more productive ones, and reduces the incentive for firms to innovate.

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10 to 15 MNC headquarters pull out of PH on tax issues November 22, 2019 | Roy Stephen C. Canivel |Philippine Daily Inquirer

Ten to 15 regional headquarters of multinational companies (MNCs) have pulled out of the country, according to the Philippine Association of Multinational Companies Regional Headquarters Inc. (Pamuri). Pamuri, which represents the industry, is not aware of the reasons behind the exit of these regional operating headquarters and regional headquarters, but one of its top officials could not help but question the timing of their move. Pamuri director Celeste Ilagan said the government’s tax reform program might be one of the reasons for the pullout as it made it too expensive for these headquarters to keep highly skilled workers or hire new ones. The identities of these headquarters were not disclosed, but their departure hinted at how some companies could not sustain their businesses under an uncertain business environment. Ilagan said 10 to 15 companies had left so far, citing data from the Board of Investments (BOI), the agency that regulated the industry. The BOI has not responded to requests for comment as of press time.

“This number came from the BOI. I don’t know if they did any exit interview with these companies. What probably is important to note is that those closures happened after the passage of the TRAIN [law],” she told reporters on the sideline of the Arangkada forum. The Tax Reform for Acceleration and Inclusion (Train) Act lowered the personal income tax of Filipinos while raising consumption taxes, leading to higher prices of goods such as fuel, sugar sweetened drinks and cars. This law also removed the preferential tax rate of 15 percent for employees of MNC headquarters. While critics called the preferential tax rate unfair, the industry said it was a way to entice top talents to join the industry and earn as much as they would have if they worked as professionals abroad. “They are companies that hire very specialized skilled workers. If these workers lose the advantage of staying in an ROHQ, and that is the preferential tax rate, the company will find it difficult to support its operations in the Philippines, " Ilagan said. MNCs established these ROHQs and RHQs to cater to their affiliates, subsidiaries or branches in the global market. The Philippines is one of many countries trying to attract the investments of these MNCs. Since they had a broad networks, Ilagan said it was easy for them to move out. At 15-percent tax rate, the Philippines was just at par with Hong Kong, which offered 2 percent to 17 percent personal income tax, and Singapore, 0 percent to 22 percent. The group estimated back in 2017 that there were about 5,000 workers who enjoyed this preferential tax perk. This incentive, according to Ilagan, is just one of three incentives that MNCs use as basis in deciding where to put up their HQs. The two others are the 10-percent corporate income tax and the exemption from local business tax, which would be removed under Citira. Source https://business.inquirer.net/283844/10-to-15-mnc-headquarters-pull-out-of-ph-on-tax-issues

JFC urges gov’t to entice new power investments November 22, 2019 | Myrna M. Velasco |Manila Bulletin

The Joint Foreign Chambers (JFC) of the Philippines is urging the Philippine government to provide a viable investment climate that shall attract fresh multi-billion dollar investments in new power capacity. Lamentably at this point, the Department of Energy (DOE) leadership of the Duterte administration has not cornered new big-ticket power projects yet that will satiate the country’s energy needs amid the massive infrastructure development buildup being pursued.

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And the biggest challenge for Energy Secretary Alfonso G. Cusi is proving that the disparate economics of greenfield (new) and brownfield (existing) capacities on his competitive selection process (CSP) dictum for power supply contracting could really entice capital flow for new power projects. The JFC fleshed out various recommendations to the government when it comes to improving investment incentives in the power sector – especially in this season of demand growth driven by the country’s expanding economy. The foreign chambers indicated that the main thrust of their recommendations “is to encourage new generation proponents and promote competition.” Among the “to-do list” for government that they lodged delved with hastening the implementation of retail competition and open access (RCOA); manage and prudently integrate the forced outage rates of power plants in energy planning; promotion of upstream oil and gas exploration activities; promoting competition instead of restricting third party access in liquefied natural gas (LNG) terminals; and truly streamline project permitting and licensing processes in the sector. When it comes to addressing the recurrent forced outages in power plants, the JFC propounded that “capacity planning must be robust, taking a probabilistic approach that accounts for forced outage rates and the effects of increasingly adverse summer conditions.” The aggrupation of business organizations opined that “the most expensive electricity is no electricity,” while adding that it would be better for the country’s power system “to have excess than deficit.”

(Cont.) JFC urges gov’t to entice new power investments

Source: https://business.mb.com.ph/2019/11/22/jfc-urges-govt-to-entice-new-power-investments/

Arangkada Forum: Turning on T.A.P (Tourism, Agribusiness and Power)

In its ninth year, the Arangkada Philippines supported by the Joint Foreign Chamber is which Korean Chamber is a member of,

held the Arangkada Forum entitled : Turning on T.A.P. (Tourism, Agribusiness, and Power) on November 21 at the Marriott Grand

Ballroom. These three important sectors are the focus of the forum wherein Arangkada invited distinguished government officia ls

and private sectors to discuss important issues related to these sectors.

The Arangkada Forum gave the Annual Lifetime Achievement Award nominated and voted by the heads of the Joint Foreign

Chambers to former Secretary of Foreign Affairs and Ambassadress Delia Domingo Albert. Unfortunately, House Speaker Alan

Peter Cayetano was not able to join, thus, he was represented by 2nd District Representative of Marikina City, Hon. Stella Ruz

Quimbo who was then the one gave the Keynote Speech during the event. KCCP was represented by its Director, Mr. Ki Suk

Hahn and he also gave closing remarks for the event.

Arangkada Forum 2019 was a success and was attended by hundreds of delegates from the private and public sectors as well as the

members of the media and corporate sponsors. KCCP also sponsored one table as a support for the event.

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PHOTO HIGHLIGHTS | Arangkada Forum: Turning on T.A.P (Tourism, Agribusiness and Power)

2019 Arangkada Forum: T.A.P Press Conference with Representatives from the Joint Foreign Chambers of Commerce

Special Panel on the Role of PPP in Build Build Build

Photo Opportunity with DOTR Asec. Giovanni Lopez KCCP Representative, Director Hahn Ki-Suk giving his closing remarks

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