Vol. XXII, No. 94 [ BusinessWorld Online ]
Thursday, December 4, 2008 | MANILA, PHILIPPINES
HONG KONG/MANILA — The government plans to lure foreign textile companies with tax breaks and other incentives to counter a decline in foreign investment caused by the global financial crisis, a Cabinet official said on Tuesday.
TEXTILES and garments are the Philippines’ second-biggest export next to electronics products.
Trade Secretary Peter B. Favila said in an interview that the government had this week approved tax incentives and duty-free importation of capital equipment for foreign investors that would set up textile factories in the country.
The proposed hub for the investments will be located in Clark Freeport, the former US airbase north of Manila, Mr. Favila said at the sidelines of a conference in Hong Kong.
"We are putting up a garments and textiles town. There are a lot of companies that are planning to move out of China and are looking at Vietnam and the Philippines," Mr. Favila said.
Donald G. Dee, chairman emeritus of the Confederation of Garments Exporters of the Philippines, confirmed the scheme, saying planning "started six months ago."
"I saw the road map I helped them put it together," he said in an interview in Manila.
But Mr. Dee, who has also been designated by the government as a special envoy for international trade relations, clarified that no additional incentives besides those offered by the economic zone would be offered.
"The [planned textile] town is in a freeport [where] there are already a lot of built-in incentives," he said.
Freeport locators are entitled to perks such as income tax holidays and duty free importation of raw materials.
The Philippines, which has relied on remittances from overseas Filipino workers to spur its economy, wants to attract more foreign investments to help fund infrastructure projects and pay its foreign debt.
Foreign direct investments fell 56% to $1.1 billion in January-August, compared with a year ago, central bank data showed.
Most of those who have signified their interest to invest in the country have postponed their plans because of the crisis, said Mr. Favila, who was in Hong Kong attending the Clinton Global Initiative conference with President Gloria Macapagal Arroyo. — Reuters with a report from J. A. D. Hermosa
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