"Government incentives spur the economy by attracting local and foreign investments," Purisima said.
"One key factor that businessmen examine in looking at sites for their operations is the incentive package available in the country," he added.
More specifically, Purisima cited the automotive industry.
He pointed out that the Motor Vehicle Development Program (MVDP) "rationalized the entry of Ford and Mitsubishi to set up completely built-up operations, thereby making the Philippines a legitimate car manufacturer and exporter."
Under the MVDP, Purisima said, Ford Philippines invested an additional $50 million in its Santa Rosa manufacturing plant, while Mitsubishi Motors Corp. has chosen the Philippines to be its ASEAN production base for it P10-billion sport utility vehicle project.
"Without the government’s incentive program, these firms might have set up their manufacturing operations elsewhere," Purisima said.
Such investments, Purisima said, could have gone to China, Malaysia or Thailand.
Purisima insisted that "incentives enable the country to compete with our Asian neighbors in luring big ticket and high technology projects."
Incentives, he added, increase the foreign direct investments that come into the country.
Investments approved by the Board of Investments (BOI) and the Philippine Economic Zone Authority (PEZA) amounted to P134.13 billion in the first four months of the year, 822 percent higher than investments recorded for the same period last year.
While Purisima acknowledges that incentives have deprived the government of much needed revenues, he countered that "the incentives given are meant to rationalize the operations of firms in doing business in the country by not burdening them with taxes before they can operate."
Purisima assured that "once their income tax holiday incentive has lapsed, the government can then collect the necessary taxes.