The head of an investment banking firm has cited the importance of the various economic stimulus proposals to the survival of private firms during this coronavirus disease 2019 pandemic crisis.
BDO Capital and Investment Corp. President Eduardo Francisco delivers his presentation through teleconferencing during the The Manila Times online forum held on June 29, 2020. THE MANILA TIMES FACEBOOK PAGE PHOTO
“Create, Arise and FIST are expected to support the corporates and financial institutions in surviving this global pandemic crisis,” BDO Capital and Investment Corp. President Eduardo Francisco said during The Manila Times online forum held on Monday.
He is referring to the proposed Corporate Recovery and Tax Incentives for Enterprises Act (Create), Accelerated Recovery and Investments Stimulus for the Economy of the Philippines or Arise Philippines Act, and the Financial Institutions Strategic Transfer (FIST) Act, which are all pending in Congress.
Francisco emphasized that the Create bill is a “very important” measure as it will make the Philippines become more competitive in terms of corporate taxes.
Create is the recalibrated version of the Corporate Income Tax and Incentives Reform Act that aims to reduce the corporate income tax rate to 25 percent by July. It will also extend the net operating loss carryover for nonlarge taxpayers from the current three years to five, which will be credited for losses incurred in 2020.
“It will also protect some of the longer investors here and give them sunset provisions for their incentives that would make us more attractive and compete more with our peers. It would bring in more long term investors in the Philippines,” Francisco said.
Meanwhile, he highlighted that the Arise Philippines Act “has very good provisions” despite its hefty cost of P1.3 trillion.
Previosly dubbed Philippine Economic Stimulus Act, the measure seeks to offer various forms of assistance to micro, small and medium enterprises (MSMEs), as well as other key sectors, including exporters, affected by the Covid-19 pandemic while rebuilding consumer confidence.
“Of course, we’re very concerned about MSMEs. We want them to get well,” Francisco pointed out.
He also expressed hope that firms will not need to utilize provisions of the proposed FIST Act, which aims to encourage financial institutions to sell their non-performing assets to asset management companies that specialize in the resolution of distressed assets.
Meanwhile, to encourage asset management companies to participate, the measure will provide incentives such as tax exemptions and reduced registration and transfer fees on certain transactions.
“Hopefully, this will not even be needed because this means that some banks are having trouble with their non-performing loans and they have to sell it or third party that happened in the past,” Francisco said.