Semicon firms hit delay in Clark tax perks’ laws

CLARK FIELD, Pampanga — The country’s biggest group of semiconductors and electronics manufacturers warned Congress yesterday that its failure to pass two proposed legislations on tax privileges for investors in the Clark special economic zone will definitely send "dangerous signals" that could scare them off.

Officials of the Semiconductor and Electronics Industries in the Philippines, Inc. (SEIPI) expressed this apprehension amid delays in the passage of House Bills 5064 and 4900 affirming the tax privileges of Clark investors and giving them amnesty from paying back taxes.

Tarlac Rep. Jesli Lapus sponsored the twin bills after the Supreme Court ruled in July last year that the Clark ecozone is not covered by special tax perks under Republic Act 7227 or the Bases Conversion Development Act of 1992.

The decision thus obliged Clark investors to pay corporate and other taxes retroactive to their first year of operations here.

The Clark ecozone hosts 36 semiconductor and electronic companies whose investments in the next five years would amount to P5.07 billion.

These firms are expected to employ 11,714 people in the next five years.

Officials of the Clark Investors and Locators Association themselves aired apprehensions that a number of the ecozone’s more than 400 investors might move out unless the two House bills are passed.

In a meeting with local officials comprising the Metro Clark Advisory Council, Clark Development Corp. (CDC) president and chief executive officer Antonio Ng said that while Clark was recently placed under the Philippine Export Processing Authority (PEZA), "there is still an urgent need to pass the bills in Congress."

This, despite the recent decision of PEZA to also extend tax privileges to tourism and aviation investments here.

"The problem confronting the investors involves the back taxes they have to pay. So the bills have to be passed (to give them) amnesty," Ng said.

He said the bills still have to hurdle second hearing after being approved in the committee level.

When the Clark ecozone was established in 1993 after the eruption of Mt. Pinatubo, the CDC lured investors by assuring them of exemptions from regular taxes.

Instead, investors were told to pay only five percent of their gross income earned, in addition to other perks such as tax-free importation for their needs.

In a meeting with CDC officials, SEIPI executive director Ernie Santiago warned that the failure of Congress to pass HBs 5064 and 4900 would mean lack of security for the country’s investors.

Santiago urged the government to pursue policies that could bolster the investors’ confidence in national economic policies.

SEIPI accounts for two-thirds or about $27 billion of the country’s total exports. Its member-companies directly employ 376,000 engineers, technicians and operators.