According to the Singapore Business Federation’s (SBF) recent National Business Survey, the Philippines was among the top 10 markets of interest for Singaporean companies looking to expand their business. This was reflected in the delegation of 21 Singapore business leaders from 14 companies who joined the business mission organised by the SBF from 9 to 11 September 2019.

Led by SBF Chairman Mr. Teo Siong Seng, the delegation met with Finance Secretary Carlos Dominguez III and other officials of the Department of Finance (DOF).

Mr. Teo shared that Singapore was the second largest investor in the Philippines in 2018, and the Philippines’ largest export market among the member-states of the Association of Southeast Asian Nations (ASEAN).

Dominguez elaborated on the Duterte administration’s goal of further reforming the corporate tax system by lowering the corporate income tax (CIT) and rationalizing fiscal incentives by making them PTTT—performance-based, timebound, targeted and transparent.

He also made it clear during the meeting that the Philippines is not eliminating investment incentives, but just wants these to be more like what they offer in Singapore, which adheres to the PTTT principle.

For instance, Dominguez said Keppel Corporation, a Singapore-based multi-business company which operates shipyards in the Philippines, should continue doing business here, but can evolve from ship fabrication to bringing here its design capabilities, which is eligible for incentives under the proposed Corporate Income Tax Incentives Reform Act (CITIRA) that President Duterte wants the Congress to pass this year.

The House of Representatives passed the CITIRA bill on third and final reading on Sept. 13, while a counterpart bill is being studied by the Senate ways and means committee.

“So that is what we are willing to give incentives to. We are willing to give incentives to engineering companies, we are willing to give incentives to companies for large data analysis, robotics,” Dominguez said.

Expressing his support for the PTTT principle, Mr. Teo said, “This is welcome news. While many Singapore companies have established operations in the Philippines in industries such as manufacturing and infrastructure, there are untapped opportunities in areas such as information technology and digital solutions, which our companies with the capabilities will be able to take up.”

During the meeting, Dominguez shared with the Singapore business delegation the three priority goals of the Duterte administration, which are to reduce poverty to just 14 percent by 2022, make the country more law-abiding by going after the most egregious violators of the law, and to ensure peace within its borders and with its neighbors. The Philippines is on its way to meeting its target as the poverty rate fell from 27.6 percent in the first half of 2015 to 21 percent during the same period in 2018.

Mr. Teo added that the economic and social progress the Philippines has made thus far makes for an attractive and compelling case for Singapore investors.

Loh Chin Hua, the CEO of Keppel Corp. who is also Co-Chairman of the Philippines-Singapore Business Council, said the company is now exploring ways on how it can expand its investments in the Philippines, especially with the Duterte’s administration’s “Build, Build, Build” infrastructure modernization program now in full swing.

He also noted that among the advantages of doing business in the Philippines is that investors can borrow in the local currency, thus reducing risks and enabling them to get reasonable returns.

“And that is quite a remarkable achievement because not many countries in this region can say that. And when you have to invest abroad but you have to borrow in their currencies, it always increases the risks,” Loh said. “For Keppel, we have operated two shipyards in the Philippines, and we are now looking to see how we can do more here.”

Dominguez said during the same meeting that President Duterte’s centerpiece program “Build, Build, Build” will provide the Philippines the stimulus it needs to keep creating jobs and opening new investment opportunities despite the global economic slowdown.

He painted a picture of this positive economic outlook for the country as he invited Singaporean investors to consider investing in “Build, Build, Build” and other related businesses that would open up as a result of this ambitious infrastructure modernization program.

“Build, Build, Build” will create jobs and boost domestic consumption, thereby shielding the domestic economy from the global growth slowdown, the adverse effects of the ongoing US-China trade war and other risks to the government’s efforts to sustain the Philippines’ high growth rate, he added.

Mr. Teo said, “ASEAN remains a bright spot in a cloudy global economy and has abundant opportunities and potential for growth. Singapore and the Philippines have always enjoyed close economic ties. As we celebrate 50 years of bilateral relations with the Philippines, we look forward to more great years ahead of getting our business communities to collaborate more closely so we can ride the ASEAN growth story together.”

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