Finance Secretary Ralph Recto urged Japanese investors to invest in the Philippines and assured them that ongoing amendments to the country’s fiscal incentives system will address their key concerns.

“To begin with, the Philippines is booming and has all the makings of a tiger economy. This makes us the most strategic safe haven for Japanese investors. We are an economic superstar in ASEAN (Association of Southeast Asian Nations), with GDP growth expanding among the fastest at 6.2 percent since President Marcos, Jr. took office,” said Recto in his speech at the Philippine Economic Briefing (PEB) in Tokyo on Friday.

Recto assured investors that the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) enhances both fiscal and non-fiscal incentives while addressing key concerns of Japanese investors.

The CREATE MORE is an improved version of the CREATE law that expands and refines fiscal and non-fiscal incentives, clarifies the rules and policies on the grant and administration of incentives, and addresses key issues affecting the country’s investment climate.

It solves Japanese investors’ long-standing concern about value-added tax (VAT) refunds by exempting export-oriented enterprises from paying the latter.

Recto said the VAT refund reforms under the CREATE MORE will also address investors’ concerns regarding the unreliability of the system, making it timely, efficient, and predictable.

The bill also provides a more attractive incentive package for registered projects or activities with an investment capital exceeding about PHP15 billion.

The doubling of the additional power expense deduction will also help mitigate the impact of high power costs and reduce the overall cost of doing business in the Philippines, given its income tax effect.

Recto said CREATE MORE will help entice more Japanese investors to establish roots and expand in the Luzon Economic Corridor.

The economic corridor was established during the inaugural Trilateral United States-Japan-Philippines Leaders Meeting last April.

Recto said the corridor is a perfect hub for those involved in cutting-edge manufacturing, semiconductor supply chains, and agribusiness as this links Luzon’s major economic centers — Subic Bay in Zambales, Clark in Pampanga, Manila, and Batangas.

According to Recto, the government is also addressing bottlenecks and streamlining processes to make it easier for Japanese investors to engage in high-priority sectors like clean energy, mining, critical minerals, retail, digital technologies, and many others.

As we aggressively enhance our logistics backbone and human capital through productivity-boosting investments, Japan’s role has never been more crucial. We need more Japanese expertise and technology for our 185 flagship infrastructure projects.

Recto said the Public-Private Partnership (PPP) Code streamlines the process, making your participation faster and easier.

“We invite you to submit unsolicited proposals for our PPP projects, respond to solicited proposals, or enter into joint venture agreements,” he said.

Currently, Japan is the Philippines’ second-biggest trading partner, its largest source of foreign direct investment, and the top provider of highly concessional official development assistance.

Japan is also the largest investor in the Philippines’ economic zones with a total investments amounting to PHP578.75 billion.

The PEB was attended by around 500 Japanese business leaders, investors, and government officials.

It was organized by the Department of Finance (DOF) and the Bangko Sentral ng Pilipinas in partnership with Sumitomo Mitsui Banking Corporation, Daiwa Securities Group Inc., Mitsubishi UFJ Morgan Stanley, Mizuho, Nomura, the Japan External Trade Organization, the ASEAN-JAPAN CENTRE, and the Japan-Philippines Economic Cooperation Committee.

Stronger ties with JICA

In a separate statement, the DOF said Recto also met with senior officials of the Japan International Cooperation Agency (JICA) Philippines on June 20, 2024 in Tokyo to discuss key cooperation projects including railway, maritime security, and development in the Bangsamoro Autonomous Region in Muslim Mindanao.

During the meeting, JICA Senior Vice President Mikio Hataeda praised the Philippine economic managers for their excellent macroeconomic management, noting the Philippines’ outstanding economic performance among its Southeast Asian peers.

To address JICA’s concern on land acquisition for Japan-supported infrastructure projects, Recto said a bill reforming the right-of-way rules is underway, which will make it easier for the government to acquire land for road and transportation projects.

Recto said the government also established an inter-agency committee to oversee right-of-way activities for railway projects, expediting the land acquisition process.

JICA officials present in the meeting included Deputy Director General for Southeast Asia and Pacific Department Yuko Tanaka, Director Takehiro Kido, Deputy Director Kota Murakami, and Assistant Director Takeshi Suzuki.

Accompanying Recto were Philippine Ambassador to Japan Mylene Garcia-Albano and Finance Undersecretaries Maria Luwalhati Dorotan-Tiuseco, Charlito Martin Mendoza, Catherine Fong, Rolando Tungpalan, and Domini Velasquez. (PNA)