By Myrna M. Velasco

The current tenor of the proposed Tax Reform for Attracting Better and High-Quality Opportunities (TRABAHO) Bill has triggered deferment of expansion projects not just in the manufacturing sector but also in power, particularly renewable energy (RE).

The Lopez conglomerate, which runs power companies and hosts manufacturing firms in their industrial estates, revealed that companies are putting on hold their plans, scared of losing competitiveness under the Duterte administration’s second tax reform package.

Energy Development Corporation (EDC), a majority-owned firm by the Lopez Group, indicated that it already put at least nine RE projects “on hold,” partly because of the uncertainty and the investment risks posed by the second tax reform package of the Duterte administration.

In an interview with reporters over the weekend, EDC President and COO Richard B. Tantoco noted that they already informed the Department of Energy (DOE) on plans to defer these specified expansion projects.

“We have nine promising sites, there are different issues in different sites so we’re asking the DOE right now to put those ‘on pause’ – so it’s suspended animation,” Tantoco said while qualifying that the TRABAHO Bill is among the major concerns.

“From an energy and sustainability standpoint, it (TRABAHO Bill) is a misguided policy to remove the incentives from renewable energy – at a time when we need to transition into clean energy,” Tantoco said.

He further asserted “definitely today with the specter of the bill hanging over the industry’s head, we will see investments slow down.”

And on the cost aspect for RE technologies down to the electricity consumers, “if you remove the fiscal incentives, the impact on your renewable energy is like taxing it 10 times that of coal,” the EDC executive averred.

He expounded that the second tax reform package is widely viewed as a ‘major uncertainty’ to investments and the entire industry, “because people are looking at their numbers and they don’t know whether they’re going to have 10% income tax or 30% – they don’t know if they’re going to import without duties or with duties.”

On government’s bid to widen the country’s manufacturing base to underpin industrialization goals, First Philippines Holdings Corp. (FPHC) Chairman and CEO Federico R. Lopez contended that the tax reform measure is also a major hindrance to expansion plans of many companies.

At the company’s First Philippines Industrial Park in Batangas, Lopez said that aerospace firm Rockwell Collins and electronic capacitor firm Murata Manufacturing had been among the first ones sounding off plans of deferring expansion due to riskiness they will be facing once the TRABAHO Bill is enacted into law.

“With the possibility of a trade war, many are looking at possibility of moving their operations from China. The Philippines having a good work force, we should be one of the many beneficiaries… but if we do this, they won’t come here. They will just go to Vietnam and all of these other countries – Cambodia and Myanmar, so we’re losing out on a golden opportunity – so you can’t have a shotgun approach,” Lopez stressed.

These concerns, he narrated, had already been sounded off to Philippine legislators as well as to Finance Undersecretary Karl Kendrik T. Chua, who he said made a visit to their industrial park to get a feel of the investors’ sentiments.

“It will be loss of jobs and investments in the manufacturing sector and losing a golden opportunity for the Philippines. A lot of it is really jobs – and to me it’s a blessing that the country has and if we don’t take advantage of that, that demographic dividend we should have will actually turn into demographic time bomb,” Lopez said.