TWO Philippine senators recently suggested that economic managers should direct American businesses leaving China to consider the country for their relocation plans.
According to Senator Imee Marcos, recent news that the United States businesses was transferring a number of its China-based factories to Indonesia confirms a growing economic trend favoring Southeast Asian countries as alternative sites for manufacturing.
The relocations are “the silver lining to the dark cloud of COVID-19 (novel coronavirus) from which the Philippines should not blink,” Marcos said.
As chairperson of the Senate Committee on Economic Affairs, she urged the government’s economic managers to apply a “full-court press to score more points toward greater foreign investment and economic recovery.”
The senator is currently pushing for a deeper and swifter cut on corporate income tax from the present 30% rate for the Philippines to be more competitive with the 20% rate in Vietnam, Thailand and Indonesia by next year.
“If the government decides on a slower rate of reducing corporate income tax, incentives to foreign investors can include tax deferrals and exemptions,” Marcos said.
Western countries affected by the pandemic are now compelled to outsource as much of their production as they can to cheaper suppliers, she added.
“As a result, I think our BPO (business process outsourcing) sector will recover sooner than predicted. If we gear up for outsourcing, we may finally derive investments in manufacturing and other essential sectors,” Marcos said.
Sen. Panfilo Lacson Sr. also noted that many European and American businesses were leaving China, saying it is expected that an Asian country will be their next location.
“Ang nakaagap agad doon ang Indonesia eh (Indonesia was the first one who benefitted [from the relocation]),” he said.
The senator estimated that 27 U.S. factories based in China would transfer to Indonesia.
“Ito ang opportunity na dapat gina-grab natin kasi ang laki ng kumpanyang ito. Sayang (This should be the opportunity that we must be grabbing because this is a big company. What a missed opportunity),” Lacson lamented.