Camarines Sur Rep. LRay Villafuerte welcomed the signing into law by President Duterte of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act as this measure will help keep businesses afloat, most especially the micro, small and medium enterprises (MSMEs), and allow them to retain their workers or even hire new ones while the country continues to grapple with the Covid-19 pandemic and its economic repercussions.
Villafuerte noted that the key provisions lowering the corporate income tax (CIT) rate from 30 to 20 percent for MSMEs, which account for 99% of local businesses, as well as the redesigned fiscal incentives system for investors have been retained in the law signed by the President, and will thus aid the private sector to recover from the pandemic-induced global recession.
“The measure is estimated to incur P133 billion in revenues losses to the government in the first year of CREATE’s implementation. But this is no cause for concern as this will translate into the biggest stimulus ever for businesses to help them retain or expand their operations, create more jobs and assist the government in its efforts to nurse the economy back to health amid this lingering pandemic,” Villafuerte, an entrepreneur before joining electoral politics and co-author of this measure said.
He said CREATE will extend a lifeline to pandemic-struck MSMEs and other businesses that expect their revenues to plunge by as much as 70% over the next two weeks as restrictions are tightened in Metro Manila and adjacent provinces to curb the surge in COVID-19 infections.
“The measure is estimated to incur P133 billion in revenue losses to the government in the first year of CREATE’s implementation. But this is no cause for concern as this will translate into the biggest stimulus ever for businesses to help them retain or expand their operations.”
Roberto Claudio, vice chairman of the Philippine Retailers Association (PRA), was quoted in media reports as saying that the two-week modified lockdown will particularly hurt restaurants, fast-food chains and non-essential retailers.
Earlier, a Department of Trade and Industry (DTI) survey showed that only 4.3% of entrepreneurs closed down their operations as of March 2021, compared to its peak of 34.2% during the onset of the Covid-19 contagion, and 10% and 5%, respectively, in October and November 2020.
However, this survey made from 28 January to 10 February 2021 only represents a total of 15,434 MSME respondents, or less than 2 percent of the over 995,000 MSMEs in the country.
Villafuerte is among the co-authors in the House of Representatives of the Bayanihan 2 as well as the earlier Bayanihan to Heal as One Act (Bayanihan 1), which authorized the President to extend close to P250 billion in emergency assistance to low-income families and workers in small businesses severely affected by the Covid-19 crisis.
As with the Bayanihan To Recover As One Act (Bayanihan 2), which provided additional capital to government financial institutions (GFIs) so that they could extend more loans to pandemic-hit businesses, CREATE will also serve as a rescue package for enterprises severely affected by the COVID-19 crisis, Villafuerte said.
Villafuerte said the P133-billion stimulus for businesses under CREATE will complement the ongoing recovery measures that the government is implementing under the Bayanihan 2 to assist pandemic-hit sectors.
CREATE will extend a lifeline to pandemic-struck MSMEs and other businesses that expect their revenues to plunge by as much as 70% over the next two weeks as restrictions are tightened in Metro Manila and adjacent provinces to curb the surge in COVID-19 infections.
As for Bayanihan 2, Villafuerte was among the key proponents of the law’s provisions that appropriated close to P40 billion to GFIs—the Development Bank of the Philippines (DBP), Land Bank of the Philippines (LandBank), and Philippine Guarantee Corp. (PhilGuarantee)—to let them expand their credit facilities to assist MSMEs and other Covid-struck sectors.
Bayanihan 2 also includes a P10-billion appropriation for the government’s Covid-19 vaccination program.
Villafuerte reiterated his call for the House leadership to set aside its Charter-change (Cha-Cha) initiative and instead prod House members to work on helping local government units (LGUs) implement the Covid-19 vaccination program in their respective districts.
He said “the House leadership should realize its misplaced priorities and quit the Cha-Cha initiative, in favor of legislators devoting their time and attention to helping educate their respective constituents on the need for them to be immunized against the deadly virus that causes Covid-19.”
Villafuerte said Cha-Cha would only polarize the country at this point when national unity in fighting Covid-19 is of paramount importance, as shown by the opposition to Cha-Cha by 10 business groups led by the Makati Business Club (MBC) and the Philippine Chamber of Commerce and Industry (PCCI), along with Catholic Church leaders, during the public hearings of the House constitutional amendments committee on this issue.
In lieu of Cha-Cha, Villafuerte supported the call by our economic managers for the Congress to act on the “doable” reforms to attract more foreign direct investments (FDIs) that could accelerate economic recovery, particularly the pending bills amending the Public Services Act (PSA), Retail Trade Liberalization Act (RTLA) and Foreign Investments Act (FIA).