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BPOs join calls to retain tax holidays
Fearing that the removal of tax incentives will derail its development road map, the local business process outsourcing (BPO) industry has joined other domestic sectors and the foreign chambers in calling for the retention of fiscal perks topped by income tax holidays (ITH).
Oscar Saņez, chief executive officer of the Business Processing Association of the Philippines (Bpap), said it will be very ridiculous for the Philippine government to strip the industry of its incentives when the likes of China, Indonesia and Malaysia "are copying our incentives."
"It [incentives] is very critical. We could lose our competitiveness," he told the the BUSINESSMIRROR.
Saņez did not give actual estimates on how the industry's targets would be set back by the "no-incentives scenario" although he stressed that the effect would be very significant.
He said the Bpap has submitted its position paper to Congress supporting the stand of the Joint Foreign Chambers and other local business groups for the retention of ITH and other tax perks.
The House of Representatives has vowed to concentrate on four bills for the rationalization of fiscal incentives when sessions resume next week.
The four are House Bill 1757, or The Consolidated Investments and Incentives Code of the Philippines, introduced by Rep. Exequiel Javier; HB 2278, or Rationalizing the Grant and Administration of Fiscal and Nonfiscal Incentives, and for Other Purposes, introduced also by Javier; HB 2530, or the Investments and Incentives Code of the Philippines, by Rep. Junie Cua; and HB 2712, or Rationalizing the Grant and Administration of Fiscal and Nonfiscal Incentives, and for Other Purposes, by Rep. Thelma Almario.
Saņez said instead of removing incentives as what the Department of Finance and some lawmakers are advocating, the government should even extend it.
The perks the government is giving, he said, are more important at this time when the companies' profit margins are being hit by the sharp appreciation of the peso and high power costs. He said their profit margins have dropped by at least 15 percent in 2007. The small ones are already saying that they will probably just close down," he said.
The BPO sector, according to its development road map, is targeting to expand its manpower to one million by 2010 from the current 320,000.
This year, the industry targets revenue of $7 billion from about $5 billion in 2007.
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