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Tuesday, October 12, 2004
RP urged to enhance perks for investors in IT, BPOs
THE Philippines needs to enhance its package of fiscal incentives, particularly for information technology (IT) companies and those offering IT-related services such as business process outsourcing services (BPOs), to further stimulate interest from new capitalists and IT investors.
According to a study conducted by German consultancy firm GTZ, the fiscal incentives offered by the Philippines, particularly for the IT companies and BPOs, still cannot compete with those offered by other countries in Asia.
“This is one of the reasons for the slow entry of capital and new information technology (IT) investments into the country,” according to a document furnished Sun.Star by the Small and Medium Enterprise Development for Sustainable Employment Program (Smedsep).
Smedsep is a Philippine-German development cooperation program that aims to establish favorable business conditions for micro, small and medium-sized enterprises in the Visayas region. The program is implemented by the Department of Trade and Industry and the Technical Education and Skills Development Authority on the part of the Philippines, and GTZ on the part of Germany.
According to Smedsep business development services senior adviser Markus Ehmann, Smedsep will propose for the government to benchmark fiscal incentives with those of India and Israel, among other countries, to identify “compensating incentives” while the amendments to the Omnibus Investments Code are still being pursued.
Smedsep’s other proposals include changes in laws that will put the country’s package of investments on a par with that in other countries, aside from evaluating the existing tax regime and proposing tax policies on stock options and capital gains to encourage entrepreneurs and venture capitalists to invest in IT companies.
Smedsep’s proposals are, however, in contrast to suggestions of economists in the country for the government to review incentives given by the government, through the Board of Investments, to foreign investors.
Rationalize
Economist Ernest Pernia said rationalizing investment packages will help the government raise revenues to solve the country’s fiscal crisis.
Other issues in the IT sector that Smedsep aims to address to help Cebu’s IT industry grow include the need to strengthen the enforcement of intellectual property (IP) rights and the need to define a comprehensive policy for data protection and network security.
For the enforcement of IP rights, Smedsep has proposed to build the capacity of the judiciary to protect IP.
As regards data protection and network security, Smedsep’s has proposed having policies that balance the need to address and comply with requirements in the United States and Europe, with the additional costs and resulting difficulties these stringent regulations could pose especially to small IT companies. (JBN)
(October 12, 2004 issue)
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