The government is encouraging Hungarian firms to establish or expand business operations in the Philippines given available investment opportunities in various sectors and the recently enacted law offering incentives to investors.
Department of Trade and Industry (DTI) Undersecretary and Board of Investments (BOI) Managing Head Ceferino Rodolfo said the Philippines remains to be a strong and resilient economy fundamentally and structurally despite the ongoing pandemic.
“We welcome Hungarian companies’ interest in industries we consider as very strategic including in water, health, aviation, ICT (information communications technology), food and beverage, and IT (information technology), among others,” he said in an online business forum.
Rodolfo hoped that the memorandum of intent signed in 2019 between the DTI’s BOI and the Hungarian Investment Promotion Agency will be an “instrumental platform” so opportunities between the Philippines and Hungary can be maximized, including in the areas of medical devices, personal protective equipment, pharmaceuticals, and electronics.
He said the country is an ideal site for export manufacturing.
“For example, even at the height of the pandemic, we did not impose any export restrictions even in the most critical products that we needed domestically like medical grade face masks. Instead, we help capacitate relevant industries and promoted repurposing of activities to increase production capacity that we needed so that companies can be able to supply our domestic market, as well as meet their export commitments,” he added.
Rodolfo said the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law can help Hungarian companies as it allows the availment of income tax holiday from four to seven years depending on the level of technology and location of the project, and subsidies for key cost items.
“The income tax holiday will be followed by another 10 years of either enhanced deductions or a special corporate income tax of 5 percent on gross income earned in lieu of all other taxes. This is for export-oriented enterprises,” he said.
Rodolfo also highlighted the removal of the nationality and export bias under the CREATE law.
“You are now allowed 100-percent foreign enterprises to register and avail of all these incentives even if you are going to sell to the domestic market. Previously, only companies that are for export are given incentives,” he added.
Rodolfo said the BOI also now allows the use of second-hand equipment provided it is still modern and up-to-date in terms of technology.
“This is especially targeted for companies who are exploring relocation of production facilities in order to have a more efficient, more resilient, and more secure supply chain,” he said.
BOI Executive Director Corazon Halili-Dichosa said Hungarian firms can leverage on the existing synergies and strengths of the Philippine priority industries which include electronics, IT and business process management (BPM), rubber and plastics, shipbuilding, mineral processing, automotive, chemicals, and aerospace, among others.
Halili-Dichosa said both IT-BPM and electronics play major roles towards the Fourth Industrial Revolution.
“The Philippine chemicals industries are (the) third largest manufacturing subsector. It is a diversified industry that is innovating to transform the country’s rich natural resources into higher value products. Included here is the pharmaceuticals industry and right now, we are working on establishing a vaccine manufacturing plant in several local companies that could provide the country some pharmaceutical security against Covid (coronavirus disease) and future pandemics,” she said.
Halili-Dichosa added the Philippines can be a base of operations to export to other markets as the country enjoys tariff preferences either through free trade agreements or Generalized System of Preferences.