[Acknowledgements]
Ladies and gentlemen, a good day to you all!
It is certainly good to have this Philippines-US Business Dialogue. We are confident that these continuing conversations will further strengthen the ties between our two nations, which is needed as we all need to work together to support the world’s post-pandemic recovery.
Economies have been ravaged and the global value chain has been disrupted. But we have started to see many signs of recovery as major economies reopen and global demand coming back.
The Philippines has also been regaining lost ground and is well on track towards a V-shaped economic recovery with our macroeconomic indices pointing towards an overall improved investment climate for 2021.
Our unemployment rate has decreased to 8.7% from a record-high of 17.7% April last year, and the Philippine Manufacturing Purchasing Managers’ Index (PMI) indices have managed to hurdle the 50-point index, from a low of 32 last year. Our Volume of Production Index (VoPI) has rebounded by 162%. Our exports also accelerated to a record 72.1% year-on-year April, even higher than the pre-pandemic level in 2019.
As a democratic nation strongly adhering to market-based principles under the leadership of Philippine President Rodrigo Roa Duterte, we continue to push for massive and meaningful economic reforms even during this pandemic, while we firefight the spread of the evolving variants of COVID-19.
The recent game-changing reform was the “Corporate Recovery and Tax Incentives for Enterprises” (or CREATE) Act to rationalize, modernize, and offer more relevant incentives to investors. Corporate income tax rate was drastically reduced from 30% to 25%, and even down to 20% for Micro SMEs. Income Tax holidays were extended from the usual 4 years to a maximum of 7 years, followed by Special Corporate Income tax rate of 5% of Gross Income Earned for 10 years for exporters and 5 years for domestic market enterprises. And this is also the game changer where domestic market enterprises, even foreign-owned, can be eligible for incentives as long as the activities are prioritized in the Strategic Investment Priorities Plan (SIPP). The framework for the SIPP has been passed by the Fiscal Incentive Review Board (FIRB), and the Implementing Rules and Regulations (IRR) have just been finalized.
Other major reforms on easing foreign equity restrictions on Retail Trade, Public Utilities, and other sectors have also been certified Urgent by the President for legislation.
To show how Philippines adhered to market-based principles, even during the height of the pandemic, our trade policies honored international trade commitments of exporters by not imposing export restrictions, even for critical medical supplies such as medical masks and PPEs, which were needed badly by the Philippines early last year.
We would like to point out that before the pandemic, the Philippines had very robust economic fundamentals, growing at an average of 6.6% from 2016 to 2019 and becoming the 3rd fastest growing economy in Asia.
We have observed that any small step towards reopening translates quickly into some gains as reported above. This manifests our economy’s resilience, which can be attributed to one of our key advantages—our people.
We have a 110 million population that has a demographic sweet spot and an average young age of 25.7 years old. That means more productive years ahead of them, providing also a rich pool of 49 million manpower resource needed for growth, as well as a continuously growing consumer base with increasing income and purchasing power.
This 49 million manpower are highly skilled, educated, dedicated, and cost-efficient workforce with a very low attrition rate. Furthermore, our people are well known across the world as highly capable, hardworking, highly trainable, fluent in English, and with cost-competitive talent. We would also like to point out that the Philippines has had a lower number of strikes and lockouts as compared to other countries around us.
Furthermore, the Philippines has preferential access in major markets through our Free Trade Agreements (FTAs), including the EU GSP+.
We also have the US GSP, which is under discussion for renewal. But we hope to strengthen our relationship beyond the GSP and graduate towards an FTA that would provide a long-term rules-based and predictable trade environment for our two nations.
Meanwhile, the Philippines is part of the Regional Comprehensive Economic Partnership (or RCEP) Agreement, which is intended to create in the region a more business-friendly environment. Additionally, we officially submitted our interest to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (or CPTPP).
However, we would like to point out that US remains an important trading partner and investment source for the Philippines in areas such as electronics, transport and storage, administrative and support services, manufacturing, real estate, and IT-BPM.
Last year, you were our 3rd major trading partner, our 2nd top export market, and 4th top import source. Moreover, you were our top source of IPA-approved investments. Presently, there are many major American companies that have already established operations in the Philippines. These include: ON Semiconductors; Legato under Anthem group, Concentrix; Procter & Gamble; Johnson & Johnson; Texas Instruments Inc.; JP Morgan Chase; and Google Services Philippines Inc., among many others.
But more than the figures, the nature and quality of investments from American companies and the business partnerships being formed with local companies have helped move the Philippines up the value chain. In particular, we’d like to cite the panelists here who are representing companies whose value chains have successfully integrated the Philippine and US advantages.
To conclude, we invite everyone to listen closely to the discussions as these will inform you of each companies’ growth story, expansion plans, and opportunities for partnerships.
For those who are interested, we can provide investment and business facilitation services through the Philippine Board of Investments (BOI) as the focal point of contact. In the US, we have four Philippine Trade and Investment Center (PTIC) offices in New York, Washington DC, Silicon Valley, and LA ready to assist you.
Given this solid bond between the Philippines and US, we’d like to assure you of our commitment to realizing your companies’ business goals in our country, especially as it would also help create jobs and employment for our people. The Philippines aims to be both a valuable contributor to your global business’ growth, as well as a strong partner of the US in building back towards a better, brighter post-pandemic future.
Congratulations again as we celebrate the 75th anniversary of the Philippines-US diplomatic relationship.
Thank you and mabuhay po tayong lahat! ♦
Date of Release: 23 June 2021